Mayor Frey proposes furloughs, cutting programs to close Minneapolis' $97.7M budget gap

The City Council will hold public hearings on the budget, and then vote on it later this month.
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Minneapolis Mayor Jacob Frey's second revised 2020 budget proposal calls for cutting programs and furloughing city employees to help close Minneapolis' projected multi-million dollar budget shortfall. 

Frey presented the second phase of his revised budget to the City Council's budget committee on Thursday. The city had already adopted a budget, but lost revenue caused by the COVID-19 pandemic and unrest following George Floyd's death led to a projected $155.9 million shortfall. 

In the first phase of budget revisions, the city saved $58 million by freezing hiring and wages and cutting contract work by 15 percent, among other cuts.

The mayor's new proposal aims to close the remaining $97.7 million gap by freezing existing spending, using cash reserves, furloughing employees and cutting programs. 

"This budget helps avoid mass layoffs while preserving our core work and essential work,” Frey said in the release. “It would be fiscally irresponsible to use all of our rainy day funds now. We are in the very early stages of what promises to be a long flood, and this work will remain ongoing.”

The revised budget prioritizes preserving investments in affordable housing, economic development and racial equity work, the release says.

Here's how the mayor's revised budget proposal breaks down: 

  • $57.7 million from cash reserves ($8 million from the city's general fund)
  • $23.6 million saved from adjustments to one-time change items/capital
  • $12.3 million saved from debt for capital
  • $4.3 million saved from employee furloughs and voluntary leaves

Frey told the City Council the budget revisions he proposed are still in flux – there's an ongoing analysis of resignations and early retirements, and the projections about the impact of coronavirus, tax revues and the potential for state and federal funds potential for early retirements, state and federal resources are "uncertain."

Limited furlough for public safety workers

Most city employees will see four to six furlough days, the mayor said, with non-union employees seeing six furlough days – a 5 percent cut. 

The number of furlough days for public safety employees will be limited, though, the mayor said.

"In an effort to avoid racking up further overtime costs, in the face of continued public pressure, I want to note that we are minimizing that amount for our fire department, police and 911 dispatchers," Frey told the City Council. 

"Let me be clear, adding furlough days here would actually cost more money, not less," he added. 

At some point this year, in order for the city to continue operating, the city may need to layoff as many as 40 employees, Frey said. But he hopes through continued negotiations with unions they'll be able to avoid most of the layoffs. 

Police department's budget largely untouched

The Minneapolis Police Department's budget will largely be unaffected by the mayor's revised budget proposal, despite calls from some to defund and restructure the department.

According to city documents, the police department will see a $50,000 reduction for "automated pawn/workforce director systems," the budget proposal states, but no other reductions from the department's budget are mentioned and the mayor noted furloughs for police will be limited to save on overtime costs.

But that could change after the City Council holds public hearings on the proposed budget.

"While there wasn't an alternative from any council member today for the public safety budget as proposed, I know we will hear about that in the two public hearings and I know we will each weigh what we're hearing from our constituents, and mayor we're willing and always wanting to work with you as much as possible," Bender said.

She noted that what they hear during the public hearings this month will inform them about what to do with this year's budget revisions as well as next year's budget, which the City Council will begin discussing next month and vote on in December. 

The Minneapolis City Council is in the process of coming up with a plan to rework the police department in the wake of Floyd's death, which prompted calls for police reform across the country.

What's next?

The Minneapolis City Council will be working on the revised budget proposal a lot in the next few weeks as it holds public hearings and makes changes. The goal is to adopt the revised budget by July 24, the release says.

And in less than a month, the City Council will begin working on the 2021 budget, Frey said.

Next year's budget will likely also be affected by continued impacts from the pandemic, as well as the unrest in the city in May and June. The Star Tribune reports next year is when Minneapolis will likely see property tax losses from the hundreds of buildings that were damaged during the riots following Floyd's death.

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