Frey proposes steep Minneapolis levy hike
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Minneapolis City Hall. Photo: Kyle Stokes/Axios
Minneapolis may soon endure its largest property tax levy hike in recent memory — 11.3% — but still would have to cut jobs under a budget proposal Mayor Jacob Frey rolled out Wednesday.
Why it matters: Years of generous salary increases and mounting inflationary pressures are beginning to overtake City Hall.
The big picture: Now, the mayor’s proposal will tee off the most painful budget fight in years, with some City Council members likely to go to bat for pet programs and other members likely to push just as hard for deeper cuts and a smaller levy hike.
State of play: The mayor’s team says Minneapolis faces what amounts to a $60 million problem: a roughly $30 million revenue shortfall, plus demands to budget more accurately for costs the city has underestimated in the past.
Case in point: After the police department overshot its overtime budget last year, Frey’s proposal for next year builds in an additional $13.1 million, up front, for MPD overtime costs.
- The ICE surge and other crises increased the size of MPD’s overtime overrun — but MPD’s reliance on overtime is likely to persist until its depleted officer ranks fully rebound.
Between the lines: These “right-sizing” measures blow a hole in the city’s budget that would need around 100 job cuts to repair.
- The city currently has some 30 to 40 vacant positions it could close, and retirements or departures could result in further savings — but layoffs would make up the difference.
- Cuts would come from every department — including MPD, where sworn officers cannot legally be cut, but civilian employees and even those meant to oversee the reform settlement could be at risk.
Friction point: Even then, Frey is proposing a tax hike to stave off even deeper cuts — and because downtown office values are still sinking, residential property owners are likely to shoulder an outsized share of the burden.
- The increase would translate to an extra $409 per year for the median homeowner.
What they're saying: "If you're going to make substantial cuts and have layoffs, it's really challenging to see both those hard choices and such a high number for the property tax levy," Council President Elliott Payne told reporters after the speech.
- One council member, Elizabeth Shaffer, told Axios after the speech that she would like to lower the 11.3% levy increase.
Other council members, including Soren Stevenson and Aurin Chowdhury, were chilly to the idea of shoring up MPD's overtime budget without addressing deeper concerns about the department's spending habits.
- "Mismanagement runs deep in the department," Budget Committee Chair Aisha Chughtai told Axios.
What we’re watching: In the long term, Frey’s team argues, there’s reason for optimism that office property values will rebound and inflation will ease.
What’s next: The City Council is responsible for writing the budget by the end of December.
A few points worth highlighting in the mayor’s proposal:
👮 MPD recruitment: Frey is earmarking around $4.3 million that MPD was already spending on recruitment but not previously budgeting for — a move akin to the overtime “right-sizing.”
- But the proposal offsets this spending by providing for a smaller class of community service officers who can’t all matriculate to MPD’s academy.
🦺 Police alternatives: Frey’s budget proposes a drastic cut to the violence interrupter program that emerged after George Floyd’s murder as part of a suite of alternatives to sending police to address safety concerns.
- The program contracted with nonprofit workers to “interrupt” possibly violent situations — but also caused a tug-of-war with the council over who should win the contracts, and faced legal challenges for a lack of financial accountability.
- Instead, the mayor proposes drastically scaling up the city’s Community Safety Ambassador program, which is staffed by city workers.
🌳 Integrating parks: City officials are in talks to merge certain functions of the quasi-independent Minneapolis Park & Recreation Board — like their separate human resources and payroll operations — with the city’s.
- The move could be delicate — the Park Board’s new majority isn’t politically aligned with Frey — but it would also help reduce the overall hit to taxpayers.
🔄 Merging departments: Frey hopes to save money by folding the city’s race and equity office into HR, and also by moving performance-tracking and neighborhood outreach teams into other offices.
🚒 Spending to save: To curb the fire department’s overtime spending, the city would spend $3.8 million and draw on federal grant funds to add 15 sworn firefighters who can cover absences without overtime.
Editor’s note: This story has been updated with additional reaction from council members.