Minneapolis taxes, budget and NRP decisions

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What is the impact of the budget passed by the Minneapolis City Council this week? The issue is complicated: budget decisions mean cuts to city services; real estate taxes will increase by 4.7 percent rather than the 6.5 percent originally planned; and funding for NRP neighborhood programs was frozen-though that may not save the city any money in 2011. The larger issues include:

The TC Daily Planet asked several people who were involved in the debate to respond to questions about these issues. We invite and will publish other responses as they come in.

Thanks to Jeff Skrenes, who works for the Hawthorne Community Council; Minneapolis City Councilmember Elizabeth Glidden; and Justin Eibenholzl, who works for Southeast Como Improvement Association for their responses.

You can find all of our NRP/Minneapolis budget/tax coverage here. If you would like to submit an article for publication, you can register as a member and upload it directly, or email editor@tcdailyplanet.net.

 

Minneapolis budget, taxes and NRP
Responses from Councilmember Elizabeth Glidden

TCDP: What is the impact of the budget on police and fire departments? On street maintenance and plowing? 

CM Glidden: The budget directs a reduction in positions of 32 FTE in Fire and 24 FTE in Police by the end of 2011.

Street maintenance has already been greatly impacted by cuts that have come to the city since 2003. Street maintenance will be reduced in 2011 by $387,000. If LGA is reduced to 2010 levels, there will be $9 million in cuts to paving projects planned for the future.

TCDP: What is the timeline for NRP cuts? What will be cut from 2011 NRP funding? Are there any specific examples of what will be cut in individual neighborhoods?

CM Glidden: At this point, what has been directed is a freeze on 50% of uncontracted NRP Phase II dollars. Further action will depend on information we receive from our staff, which will come in January and February as directed in the full staff direction connected with the 2011 budget.

I am sure each neighborhood will have unique examples of what programs will be impacted by a 50% freeze of Phase II uncontracted dollars. Because a large percent of Phase II was directed to housing or housing related programs, home loan programs may be the most common example. Community engagement/neighborhood funding dollars that are allocated to each neighborhood will be available as of January 1, 2011. This new funding will help ensure that neighborhood staff and administrative costs are covered into the future. As well, the City directed staff to work with the NCEC on how to mitigate equity issues for neighborhoods as caused by the 50% freeze.

TCDP: What can the city council do on its own with NRP funding, and what does it need to get legislative approval to do?  What are the prospects for LGA funding in 2011 and 2012? 

CM Glidden: We will be receiving information in the coming weeks on what the City can do on its own regarding NRP vs what is legislative approval needed for

Regarding LGA funding, we all know the state has a $6.2 billion deficit. While Governor Dayton has been very supportive of LGA in his public comments, we believe that reductions are likely because of the deep problems at the State. We will obviously learn more as this legislative session for 2011 unfolds.

 

NRP impact: “Just like if your savings account was frozen …”
Response from Justin Eibenholzl

NRP has been defunded since 2009 when the tif district was decertified.  No money has been going into that pool (common project fund?) since then … No money for NRP was in the [City of Minneapolis] 2010 or 2011 budget (or any budget), so none will be saved. 

Instead, the City has made a move to freeze all the transactions in the NRP fund, and seize 50% of the remaining amount.  They will have to get legislative approval to spend this money as this action is currently illegal under state directed purposes.  That is what was weird about doing this now, since the first it would impact the budget would be 2012 and it’s only $5.5M for that year and $5.5 for the next. 

But [freezing the NRP funds] will shutter most offices and activities within the next three-six months if the NRP Phase 2 funds are shut down.  Just like if your savings account was frozen and you were planning on making withdrawals to pay for some bills like leases, rent, staff or contract obligations.  But NRP is volunteer based, and they are judicious with their funds, that’s why the City even has something to raid or steal from. 

The City will be sued over this, as contract obligations are missed because they seized funds that they didn’t have the direct authority to seize.  That will cost the taxpayers more, as the City will lose that battle, but the damage to the 74 charities will be done by then, as they will have had to close and cease many of their operations and programs.  It will also have the effect of discouraging participation in community building, because if they think any plans or agreements will just be ignored by the City, why participate?  You may as well stay home and read a book or play games, etc. This loss of trust and betrayal will be the hardest thing to overcome.

For Como, we are past spending 50% of our Phase 2 funds, so we will be blocked from contracting anymore.  Those funds were set aside for police buy-back patrols, working with southeast seniors, working with the Southeast Minneapolis Council on learning, the Southeast Library and many other programs.  These were funds we would contract only if we had a committed source of funding, which we don’t. This value and about $111,000 will be lost today by the Como neighborhood, for between $20 and $40 per year in tax relief for 2012 and 2013. …

They also held harmless the new Neighborhood and Community Relations Department (NCR) which did have about $6M allocated in the 2011 budget, and which no one asked the City to create.  The NCR has 12 staff and no one knows what their purpose is, other than to be a redundancy to the existing NRP contracting staff (currently six).  If they would eliminate the NCR department (unwanted) they would have $6M to play with for 2011, but that wasn’t ever on the table.  They could say those funds are committed based on tif, but so were the NRP funds, so what’s the real difference?  Simple: RT and Hodges and Johnson want a department of stooges they control, and that is not the current NRP.

$5.5 Million accounts for less than 0.4% of the proposed 2011 budget, but you would have thought it was $500M the way my councilmember fought to take it away from NRP.  Not exactly a dramatic budget cut or significant tax relief.  The mayor had proposed about $80M in new spending in the August version, and then another 1.2% was added making it close to $100Million in new spending for 2011. None of that was talked about at the budget approval last night.

 

Timeline for NRP cuts
Response from Jeff Skrenes

This is just my understanding of the issues, and the caveat here is I could be wrong, but…

The timeline for NRP cuts:  The freezing of NRP Phase II money is going to happen pretty much immediately, as far as I can tell.  The actual cutting of those funds will happen only if the legislature goes along with the plan.  I’m told that all of our Minneapolis state legislators are in support of the neighborhoods.  Presumably we can get a fair amount of St. Paul and suburbanites too.  But will outstate legislators in a Republican-controlled house and senate stand up for us?  My hunch, unfortunately, is that the prevailing attitude will be “If the city of Minneapolis has figured out how to minimize tax hikes, let’s not think twice about it.”  I’m not optimistic about the legislative chances here, unfortunately.

What will be cut is going to vary from neighborhood to neighborhood.  For instance, in Jordan, they are set to lose over $400,000 and since they’ve spent over 50% of their NRP funds, then anything uncontracted is gone.  Since it’s uncontracted money that is being targeted, perhaps a better way to ask the question is “What would neighborhoods want to do that they will no longer be able to implement?”  Hawthorne’s Phase II plan has not yet been approved.  So one school of thought is to simply cut all of our proposed plans by 50%.  However, that might not be realistic for the implementation of higher-cost items.  We will likely go back to the drawing board and eliminate some plans altogether or at least eliminate their funding allocation.

Here’s a hypothetical example:  We could say that a 50% cut in our program for down payment assistance is too steep.  And then we could say that a proposal to spend $10,000 on community gardens and $5,000 on youth programs are no longer sufficient priorities for our limited funding.  They get the axe and the $15,000 gets diverted to compensate for some of the housing cuts.  But anything concrete is premature in Hawthorne because we just haven’t met as a board to figure out what this means.

And as stated above, my understanding is the NRP money can be frozen by the city council, but not reallocated without legislative approval.