Budget-in-Brief
Spending
The Council Adopted Budget for all City funds is $1.66 billion in 2023 and $1.72 billion in 2024. This represents a $60 million, or 4 percent increase into 2023 from the 2022 Council Adopted Budget of $1.57 billion exclusive of the City’s Independent Boards and interfund transfers.
Revenue
The Council Adopted Budget includes $1.57 billion in revenues, a 4 percent drop from 2022 largely due to the absence of new American Rescue Act revenues from the federal government in 2022. Total revenues increase to $1.67 billion in 2024.
The Council approves a 6.5 percent increase in the property tax levy in 2023 and a 6.2 percent increase in 2024. This raises the total amount levied by $27 million in 2023, and $27.6 million in 2024.
Property Tax Levy
Property taxes are the General Funds largest source of income and support many of our core government services. Property Taxes are based on a property's market value. In Minneapolis, residential markets grew quickly into 2022 while commercial values held virtually flat. Due to these trends in property values a 0% increase in the levy would have resulted in a $44 increase in property tax for the median Minneapolis single family home. The Adopted Budget's Property Tax Levy Increase of 6.5% will result in an increase in a median value homes property taxes of $167 annually.
The City's Property Tax Levy includes revenue for the Park Board. For more information on the Park Boars Adopted Budget visit the Minneapolis Parks and Recreation Board's website.
For more information on the long-term plan for General Fund revenues, see the Five-Year Financial Direction.
What will my 2023 City Property Taxes Pay for?
A median value Minneapolis home with an estimated value of $319,000 increased in value by about 9.2 percent from 2022. Under the Council adopted levy their property taxes will be about $1,835 next year. See where the $1,835 goes under the Council Adopted Budget in the table below:
Parks - $324
Public Works - $138
Fire - $153
Police - $410
Capital and Debt Service - $270
Pensions - $57
General Government Service - $485
General Fund
Spending in the General Fund is up 3% compared to last year. However the 2022 budget included around $30M in one time spending which was not included in the base budget for 2023. Putting aside one time spending in 2022, expenditures in the General Fund are increasing by 8% as departments continue to catch up from the budget cuts of 2020 and 2021.
In the table below the Property Taxes line includes the General Fund levy and the Municipal Building Commission (MBC) Levy since the City collects both of those revenue streams and then distributes to the MBC. The Transfer in from Special Revenue funds represents the use of American Rescue Act funds to replace lost revenue. This amount is consistent with the three year plan for replacing lost revenue in the General Fund with a portion of the City's ARPA allocation approved in last year's Council Adopted Budget with the addition of $9.5 million in previously appropriated ARPA funds that are repurposed in this budget on one-time Housing and Economic Recovery and Inclusion projects.
Council Adopted Budget Highlights 2023-24
The Adopted Budget includes proposals for new spending in the following priority areas: City Capacity and Performance, Public Safety, Economic Inclusion, Climate and Public Health, and Affordable Housing. For more information on these proposals and how they align with City Goals and Performance Metrics visit the City Performance and Investments by Priority page of the Budget Book.
Trends and Accomplishments
In 2022 Minneapolis has made great strides in its economic recovery. Several months of sales taxes receipts have approached pre-pandemic levels, American Rescue Plan Act Funds have all been budgeted and programs have begun operation to impact the residents of the city. In July of 2022 S&P Global issued an AAA rating with a stable outlook, which is the highest rating offered by the agency. Fitch has issued a rating of AA+ with a positive outlook, which indicates a very strong capacity for the City to repay debt. These affirmations reflect the City’s continued financial resilience during the recent challenging period, confidence in our financial planning, favorable debt ratios, and a robust economy.
Challenges
Minneapolis faced new challenges in 2023 that are addressed in the priorities and investments in this recommendation. The passage of a Charter Amendment in 2021 restructured City Government to clarify, improve and streamline governance and a consent decree with the State and Federal Governments is anticipated sometime in the next two years to continue the work of reforming the Minneapolis Police Department and public safety services in the City. The tight labor market and economic uncertainty facing businesses and governments around the country are also impacting City departments ability to hire and retain talent to provide important City Services. In addition to these emerging issues, Minneapolis is still recovering from the economic impacts of the COVID-19 pandemic and the civil unrest that erupted in the city in the summer of 2020 after the murder of George Floyd by a former member of the Minneapolis Police Department. Nearly all Departments saw budget cuts in 2020 and 2021 and while the 2022 budget restored a portion of that funding, many departments continue to operate at a lower capacity than they did before the pandemic.
Adopted Budget Priorities
City Capacity and Performance
- $4 million to improve road and trail maintenance, streetlight repair and targeted lighting improvements in North Minneapolis, litter pick up and 311 response.
- Broader flexibility for the Department of Human Resources to recruit and retain a high quality workforce.
- 4 new staff for the Office of the City Auditor including 2 Public Safety Auditors and 2 new staff for the Policy and Research Division, and ongoing resources to provide nonpartisan research, analysis, evaluation and consulting services to the City Council in support of legislative, policymaking and oversight functions.
- An 87 percent increase in funding to the newly formed department of Racial Equity, Inclusion and Belonging
- Brings back over 50 FTEs to the City's workforce, matching the pre-pandemic workforce size by 2024.
Public Safety
- Funds the Office of Violence Prevention with ongoing General Funds in 2024 and transitions the office to a new, stand alone department called the Department of Neighborhood Safety.
- Funds 731 sworn officers in the Police Department and 4 classes of new recruits in each year of the budget.
- Expands the successful Behavioral Crisis Response program, an alternative to police response to some 911 calls, in both 2023 and 2024.
- Adds three new positions to the newly formed Department of Performance, Management and Innovation to analyze, design and pilot new projects aimed at transforming public safety, including transferring more non-emergency calls from 911 to 311.
- Adds five new staff positions to the City Attorney's office to improve charging decisions made on city criminal cases, and dedicate staff to address deficiencies identified in the Minnesota Department of Civil Rights investigation. Adds one new Community Attorney to be embedded in police precincts to partner with law enforcement, residents and neighborhood businesses to enhance public safety and to reduce and prevent crime.
- Appropriates funds for public safety contracts with community groups who provide innovative public safety services to in high crime areas of the city.
- Appropriates over $9 million for street light system replacement over two years.
Economic Inclusion
- Builds on ARPA investments by adding $2 million to the Commercial Property Development Fund.
- Supports economic development along 38th Street.
- Supports a business incubator on West Broadway led by the Black Women's Wealth Alliance.
- Appropriates $1,150,000 for the Community Safety Specialist program which provides competitive grants to community-based organizations to provide training for young people interested in a broad spectrum of public safety careers.
- Ongoing funding for Black Business Week to celebrate and patronize our City's black owned businesses.
Climate and Public Health
- Invests over $600,000 in ongoing funds in treatment for Opioid addiction, including $150,000 focused on low-income communities in South Minneapolis.
- Invests over $500,000 over two years in the Green Cost Share program which will help businesses reduce environmental pollution through solar energy and weatherization projects.
- $700,000 to design and build Electric Vehicle Charging stations and leverages an estimated $2-3 million in federal funds to support electric vehicles and carbon emission reduction.
- Appropriates funds for maintenance of city-managed landscaping on complete streets projects, including specialized vegetated areas that are between the curbs, such as traffic circles, medians, and bike buffers.
- Establishes a position at the city to coordinate and maximize efforts to expand and equalize the City's tree canopy.
Affordable Housing
- Invests $16.8 million in 2023 and $18 million in 2024 in the Affordable Housing Trust Fund.
- Builds on ARPA investments in the NOAH and Minneapolis Homes programs.
- Fully funding renters right to counsel with ongoing General Fund support.
- Investing an additional $2.7 million in Minneapolis Public Housing, building on previous ARPA investments and an ongoing $1 million commitment.
- Directs $1.2 million in federal block grant funding to the Minneapolis Public Housing Authority to complete installation of fire-suppression systems in MPHA buildings.
For a full list of new funding proposals that are a part of the Adopted Budget see the Major Changes document.
Presenting a two-year budget
To navigate the tumultuous financial conditions of the past two years the City has relied on multiyear planning to maintain our city’s financial health. This year we are formally presenting a budget for 2023 and a plan for 2024. What does that mean?
- The Mayor will still recommend, and the Council will still approve, budgets each year.
- 2023 amounts will be appropriated by Council and signed by the Mayor this year.
- 2024 amounts are planned and will be the basis for the 2024 Supplemental Budget. They will be voted on and appropriated in December of 2023.
Because of the presented 2024 plan, next year’s budget process will be brief, enabling departments and leadership to focus more on service delivery and management. The supplemental budget process will focus on re-forecasting revenues and addressing any new, must-do spending items.
- The next 2-year budget cycle will begin in 2024 and will cover 2025-2026.