by Scott McClallen
Minneapolis Mayor Jacob Frey presented a plan to patch a more than $155 million revenue gap using furloughs, cash reserves and spending freezes.
The deficit followed the COVID-19 pandemic and riots in the wake of George Floyd’s death in police custody, which combined brought a steep drop in parking, utilities and general revenue.
“This unprecedented time calls for an unprecedented approach to our budget,” Frey told the City Council Thursday.
The city saved $58 million from a freeze on discretionary spending and cutting contracts, which reduced the deficit to about $98 million.
Frey suggested using $58 million in cash reserves combined with $23 million in spending adjustments in capital projects, $4 million savings from furloughs, and $12 million in borrowed funds.
His proposed spending cuts range from between 4 percent to 47 percent, depending on the project.
Frey suggested furloughing most employees between four to six days.
Furlough days are minimized for the fire department, police officers, and 911 dispatchers, Frey said, because those days would cost the city more money, instead of less.
The city might have to lay off up to 40 employees to keep operating, Frey said.
“This budget helps avoid mass layoffs while preserving our core work and essential work,” Frey said. “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.”
Frey said that voluntary employee leave saved about $600,000.
The budget analysis is still “in flux,” Frey said, while officials estimate the cost of early retirements, resignations and the possibility of pocketing state and federal funds.
The mayor suggested delaying major policy decisions until the next budget year.
“Major departmental, programming and staffing changes should be thoroughly vetted and implemented for the 2021 budget, which will be underway in less than a month,” Frey said.
The Minneapolis City Council will meet at 10 a.m. Friday for more in-depth information, and hold public hearings on at 6:05 p.m. July 14 and 10 a.m. July 22.
The council expects to present a final revised budget proposal on July 24.
Council President Lisa Bender applauded the proposal, which protects many of the city’s affordable housing projects.
“I agree that as our city faces these multiple layers of crisis and economic hardship, that we have been able to put forward cuts that really preserve the core values of our community,” Bender said.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Jacob Frey” by cityofminneapolis.
