Counting the Pennies
The Budget Committee of the Minneapolis City Council has been busy, and their activity will result in higher fees and taxes for residents.
Typically, coverage of a city budget committee meeting would make for good bedtime reading—capital “B” Boring stuff. That wasn’t the case this week. At the September 26 meeting, Chair Aisha Chughtai and Vice-Chair Emily Koski introduced a legislative directive requesting Mayor Frey provide detailed financial reports by October 15. Mayor Frey decided to attend the meeting and question his Budget Director, Jayne Discenza, as though it were an episode of The People’s Court. The meeting can be viewed here, but we recommend skipping the first 90 minutes.
Meeting Overview
Trust and cooperation between the city council and the mayor continue to erode, and this meeting was an example of the growing tension between the two branches of government. Council President Eliot Payne exemplifies this attitude. During a discussion of KPIs (Key Performance Indicators, for those without an MBA), he took the opportunity to voice his negative opinions about the strong mayor system. Payne has made it clear since the first council meeting that he intends to prove the city council is an equal branch of government, and he has been arm-wrestling with the mayor for power ever since.
Ostensibly, the current impasse stems from the city council granting $1.5 million to save the Agate Housing and Services shelter from permanent closure. The effort was led by Council Member Jason Chavez. Since its passage on September 19, an anonymous donor has provided matching funds. The combined amount will allow Agate to make necessary repairs to their facility and continue operating as a homeless shelter. The Council Members who voted against the proposal—Rainville, Vetaw, and Palmisano—have consistently shown they prefer a more planned approach to city governance. The others took a victory lap.
If one were to be cynical, they might view the hasty approval of this money as a ploy to garner votes in next year's election. It gives the impression that the city council, which has so far failed to make significant progress on homeless policy, is taking action.
The $1.5 million granted by the city council had to come from somewhere, and that "somewhere" was departments that had reported underspending in the last budget. According to the mayor, council members should have consulted his budget staff first. Had they done so, they would have learned that this money was not available for reallocation. His staff sent an email to city council members outlining the cuts that would be necessary to cover the grant. In response, Council Members Chughtai and Koski issued their directive requiring a slew of new reports from the mayor. The city council seems to believe that the mayor and his staff are being deliberately opaque with the budget.
Outcome for Residents
The ongoing rancor and distrust at city hall reinforce our belief that the real fight should be over how deeply to cut government spending across the board. There are too many pet projects, too many favors being repaid, and an ever-growing number of city employees. The burden for this additional spending falls on Minneapolis residents. We’ve advocated before—and will continue to advocate—for a 3% reduction in spending across all departments. It’s clear that the mayor and city council won’t be able to agree on which programs or departments to trim, so the bluntest tool in the finance toolbox should be used: an across-the-board cut. They are spending as though we’re experiencing a boom, meanwhile, a fire sale is underway on commercial real estate. The Forum office tower downtown recently sold at a 91% discount from five years ago.
Earlier this year, Hennepin County Commissioners voted to give themselves a 49% raise. Were it not for immediate backlash, their salaries would have increased to over $182,000. They ultimately settled on a 5% raise. Commissioner Angela Conley attempted to justify this raise to constituents by citing her personal hardships and expenses. We do have sympathy for her—after all, it’s becoming more expensive to live and raise a family in Minneapolis. Recent articles, which we plan to discuss in the future, have highlighted how the population in Minneapolis is stagnant due to young families moving further out in search of larger, more affordable homes.
Housing and city life are becoming more expensive, in part because both county and city governments continue to grow and spend more money. Raises for our politicians would make more sense if they could run on platforms that demonstrated fiscal discipline rather than unchecked spending.
What Residents Can Expect in 2025:
A Minneapolis property tax levy increase of 8.3%, higher than the initial 8.1% proposed by the mayor.
A 5% increase in Minneapolis fees across the board, including the fee for holding a going-out-of-business sale.
A Minneapolis sales tax exceeding 9%.
A Hennepin County property tax levy increase of 5.5%. A significant portion of this, $40 million, will go to subsidize Hennepin County Medical Center (HCMC), where the cost of caring for the uninsured continues to rise.
Finding the Fluff
Council Members Koski and Chughtai are right: it is difficult to parse the mayor’s $1.9 billion budget. Going line by line to find the fluff is a challenge—possibly by design. Mayor Frey also has a point; the city budget staff should serve as a guide before funds are haphazardly reallocated. As Council Member Vetaw noted, she is now fielding calls from others with their own needed building improvement projects. It makes sense to plan for these expenses rather than react to headlines.
Like Commissioner Conley, everyone has personal expenses. There's an ominous oil light flashing in our ten-year-old Passat. The shingles on the roof need replacing, and fixing the leaky bathroom faucet will cost $400. We have one son in college and another a year away. We want Allina Health to stop texting with friendly reminders to check their portal for an unpaid bill. Meanwhile, home, health, and car insurance costs continue to rise. We urge the city council and mayor to stop their chest-thumping and find ways to reduce taxes and fees on residents. There is a limit to how much taxes can be raised before people stop shopping, going out to eat, or cut back on necessities. Potential business owners and developers may think twice about investing in the city when faced with escalating costs.
If our elected officials need help building trust, negotiating, and collaborating on the budget, we know a few successful consultants who could assist—for a fee, of course.
The problem is most of the city council failed to read their job description as they accepted the position. Frey may not be everyone's favorite city official but at least he is trying to run the city. Our city council would rather try to fix the world than help manage our city. Granted they would not mind mico-managing the bits they find inconsistent with their own goals but then again that would not be their job. Frey should have known that publicly calling out the council would only create a bigger divide but the council needs to grow up and start looking at what is not working in their back yard instead of someone else's. Good intentions are not enough, sometimes tough love and restraint is the correct course of action. Unfortunately we the voters are gravitating to to those with the best intentions rather than those with a realistic view of what is practical and possible.
Are there term limits on city council members?