Mpls. Initiates $23M in Cuts After Losing State Aid

Under the agreement signed by Governor Mark Dayton to end the state shutdown, the City of Minneapolis will lose $23 million in government aid.

The City of Minneapolis on Thursday announced a series of budget cuts that will make up for $23 million in local government aid (LGA) that was lost under the state budget agreement that legislators reached on July 20.

The cuts are on top of 80 full-time job cuts that the City of Minneapolis announced prior to the start of the 2011 budget year.

The Minneapolis City Council and Mayor R.T. Rybak approved the cuts last December in anticipation of receiving less LGA than the $87.5 million that was originally approved.

Under the budget deal just struck between Governor Mark Dayton and the Republican-controlled Legislature, Minneapolis will receive only $64 million in LGA in 2011.

According to the city, the 2011 amount is the same as what it received in 2010, but the 2010 amount represented a cut of $26 million from the $90 million in LGA that the state had approved earlier that year.

The state approves or “certifies” LGA funds at the beginning of each year, but the actual amount that is allocated can fluctuate from the certified amount based on changes to the state's budget, which aren't determined until mid-year.

LGA is a state program through which funds are distributed to cities using a formula that compares a city's spending needs with its ability to raise revenue. LGA often funds services like police and fire protection, libraries, parks and recreation programs, and road work.

The two largest cuts under the city's plan are a $7.1 million cut that will delay pension debt payments and a $6.2 million cut to its street paving programs-which represents more than 50 percent of the city's overall street paving budget.

Other cuts to offset the $23 million in lost funding include:

  • $2.8 million to offset future property-tax increases
  • $2 million in across-the-board cuts to all city departments, which reallocates health-care cost savings that were identified last year
  • $1.7 million for wage and salary increases for city employees
  • $1.45 million to the city's fire department
  • $1.35 million to the city's police department
  • $1 million to the Minneapolis Park and Recreation Board and the Municipal Building Commission
  • $700,000 for one-time “innovative initiatives”
  • $350,000 for innovations in Neighborhood and Community Relations and Business Information Services

“Reluctantly, we must make the cuts that we said we would make because the state has left us no choice,” Mayor R.T. Rybak said in a statement. “We are cutting much-needed street paving despite this year's record numbers of potholes. We are slowing our debt repayment despite the fact that doing so has helped restore Minneapolis' AAA bond rating and save taxpayers money.”

According to the city, $352 million has collectively been cut from Minneapolis' LGA since 2002, including $71 million in the last four years. Because of LGA cuts, the burden of paying for basic services has shifted onto property taxes, the city said in a statement.