On the chopping block

City, school district face tough budget choices; feared cuts in state aid could compound woes

The outgoing City Council made the easy choices.

When it passed the 2002 budget on Dec. 13, it voted to reduce the mayor’s proposed property tax levy by approximately $5 million, to $58.2 million. But it walked away without making the tough choices –deciding which programs and services

to cut.

As the curtain rises on 2002, a brand new council sits center stage amidst an unfolding budget drama that is being played out not only in City Hall but also in the offices of regional, state and school budgetmakers.

The Minnepolis Public School system has to cut more than 4 percent from its budget, or $30 million, while the state has to cut $2.2 billion, or 6 percent.

The Metropolitan Airports Commission has slashed plans for its home sound insulation program for the coming year

in the wake of serious revenue shortfalls. The promised expansion of the noise program is again murky.

The picture isn’t as grim for the city’s library and parks systems. Work will progress on a new downtown library and planetarium this year. And while a budget increase isn’t what park leaders say they were promised — they again are talking

referendum — their budget still got a 12 percent hike.

Phase II of the Neighborhood Revitalization Program got pulled from the scrap heap, although annual funding will be below initial expectations. Some neighborhood organizations are scrambling this year to launch their own fundraising efforts.

Here’s a look ahead at the year to come Budget cuts and more cuts Rising health-care costs, approved labor contracts and changes in tax-increment financing put pressures on the city’s budget, and Mayor Sharon Sayles Belton proposed department budget cuts of 3 to 5 percent.

Her budget eliminated some street maintenance programs, reduced police staffing levels and eliminated crime

prevention personnel and greatly reduced the scope of the Minneapolis Community Development Agency.

The City Council adopted her plan, plus the added reductions in the levy. It means the city’s budget will increase 3 percent over last year.

To meet that target, however, the new City Council has the unenviable job of chopping $5 million more.

And more cuts loom on the horizon, this time in state aid.

In an effort to manage a $2.2-billion state budget deficit (roughly 6 percent of the total), some state officials have hinted they may cut state money that goes to cities, known as Local Government Aid (LGA).

The city of Minneapolis anticipated receiving $111.6 million in LGA in 2002, a slight increase from similar aid it received in 2001. It shares the money with independent boards, such as the Park Board and Library Board.

State aid makes up 37 percent of the city’s general fund — and it pays for things like police and fire, the city attorney’s office, stoplight maintenance and snow-plowing.

Gov. Jesse Ventura said cities should tap into reserves to deal with an LGA cut, but keeping reserves at certain levels are part of the city’s fiscal practices — practices that help maintain a strong credit rating, according to finance officials.

Where to begin The first key decision for the City Council is whether to target cuts to certain departments or spread cuts evenly across all departments, making them share the pain.

Targeting the cuts seems a likely choice, since some departments have taken a larger hit than others. The police department, for example, already anticipates understaffing of more than 40 officers this summer as a result of the mayor’s budget.

"We will be well on our way back to where the department was in 1995," Police Chief Robert Olson wrote in a budget document. In 1995, Minneapolis was dubbed "Murderapolis" by the New York Times because of the city’s high crime rate.

Public Works Director David Sonnenberg said he recognizes the police department is "hurting big time" and that more cuts likely will be directed at his department because there are fewer public safety implications.

Yet even in Sonnenberg’s roughly $233-million budget, only a small portion — roughly $20 million — remains accessible to cuts without major impacts to the services the city provides. Even these funds cover snow and ice control, pavement repair, street lighting and traffic signal maintenance.

"The idea that you can just keep shaving a bit off has been taken to the extreme," Sonnenberg said. "We’ve been doing that for all of the seven years I’ve been here. When you shave enough on a critical activity, you lose the critical mass."

For the council, the decisions will involve more than just trimming current programs, according to City Councilmember Barret Lane (13th Ward).

"We’re going to have to make decisions on what lines of business we want to be in and what lines of business we don’t want to be in," Lane said.

"This is something that needs to be done anyway. For two years I’ve been telling people we have the same type of structural problems as the state does. It costs more to do what we do than we take in. Perhaps having them forced upon us makes them more palatable. It’s simply not possible any longer to avoid them."

Parks: Referendum ahead?

The Park Board this year plans to gear up its first master planning process in more than three decades and again

is eyeing a referendum to improve its facilities and programs.

"The Park Board doesn’t want to be subjected each year to the whims of the City Council," said newly elected Park Board President Bob Fine. "There is still talk of doing a referendum, which would more or less guarantee our independence and allow us to determine our own fate."

The Park Board got nearly a 12 percent budget increase in 2002, but some on the board said it falls short of the deal they reached with former Mayor Sharon Sayles Belton.

The Park Board had contemplated a referendum roughly two years ago to address what it said were inadequate fields and facilities and to improve park offerings. It agreed to drop its plans to avoid competing with a school referendum and library referendum already heading to the ballot.

It cut a deal with Sayles Belton and

a majority on the Board of Estimate and Taxation. It would get a $10.4-million budget increase for new projects, phased

in over 4 years.

In December, the Park Board and City Council wrangled over the amount of aid the city would give to parks and other budget changes — again triggering talk of a parks referendum.

(The Park Board is an independently elected body, but the City Council reviews its budget and can affect the state aid it receives.)

"The board feels it has always put its needs on hold to be a good partner for the other interests in the city," said Parks Superintendent Mary Merrill Anderson. "The board feels now it needs to put its agenda on the front burner."

If the board wants to go to referendum this year, it would have to make the decision by this spring, Anderson said.

A top parks priority for 2002 is launching the first master planning process since the 1965 Brightbill study, the impetus for the neighborhood park system. The process will look at everything from the Park Board’s finances, structure and its recreation and athletic programs, to land acquisition and environmental issues, Anderson said.

The Board will start asking for public comment this spring, including public hearings, surveys and focus groups, she said.

Library: A catalogue of projects The Minneapolis Public Library system fared well in the city budget, getting more than a 10 percent increase. Its 2002 to-do list is a long one, fueled in great part by the $140-million referendum city voters passed in November 2000.

In Southwest, the big news is that the Linden Hills community library is expected to reopen this spring, possibly in April.

"We have a huge amount of work on our plate," said Library Director Mary Lawson, saying that 2002 projects include:

 

  • Working on the master plan and schematic design for the new downtown library. The library will also launch "the silent phase" of the capital campaign. The project will

     

    get $110 million from the referendum,

    but the Library Board expects to

    raise an added $15 million from private sources.

     

  • Creating a temporary site for the downtown library at Marquette Plaza. The old Central Library is expected to close around Aug. 1.

     

     

  • Developing the business plan and

     

    partnerships for the new $34.5-million state-of-the-art planetarium. Its future hinges on the city’s success in lobbying the state for $30 million in the bonding bill.

     

  • Developing schematic designs for Sumner, Franklin and Roosevelt community libraries, and construction on Pierre Bottineau library.

     

    With its budget reserve and with money carried forward from its 2001 budget, even with expected state aid cuts, "we should be able to do OK," Lawson said.

    Schools: Superintendent ‘deeply troubled’ For the second straight year, the financial picture looks grim for the Minneapolis Public Schools. After reducing this year’s budget by $25 million through a variety of painful measures – including eliminating over 200 staff positions and voting to close three schools next year – the district must now contend with a projected $30-million budget deficit for the 2002-2003 school year.

    Eliminating transportation for certain high school students, increasing class sizes by one student, freezing non-teacher wages – these are just a few of the preliminary options being considered by the School Board and by Superintendent Carol Johnson, who said that she is "deeply troubled by the budget challenges that the district faces." Johnson announced last week that given the district’s grave financial situation, she could not accept the $30,000 salary increase approved by the Board at its December meeting.

    David Jennings, the district’s chief operating officer, said that choosing among the preliminary options – which also include cutting all transportation for athletics and community education and increasing the walking distance from 1.5 miles to 2 miles for high school students – will not be easy.

    But, he said, "In the midst of all this, a boldness must be called for." Jennings added that there should be no "sacred cows" among the budget reduction options.

    To elicit community input to the proposed budget reductions, the district is holding two public hearings: Jan. 22, 6 p.m., at Washburn High School, 201 W. 49th St., and Jan. 24, 6 p.m., Edison High School, 700 22nd Ave. NE.

    Superintendent Johnson said that the district would need the community’s help in prioritizing the various options being considered.

    "This list is very painful and difficult and people-intensive," she said. "To think that some people will not lose their jobs is to not understand the gravity of this budget situation."

    Neighborhoods: Budget squeeze trickles down In 2002, the Neighborhood Revitalization Program will proceed into Phase II, for which the council allocated $11 million. It also decided to spread the proposed $200 million in funding for Phase II over 15 years instead of 10 years as initially planned.

    "It gives it a green light," said Bob Miller, director of NRP.

    But future funding for NRP remains less certain. Some creative budgeting, including using leftover Phase I money and tapping into interest from reserves, enabled first-year funding. In future years, the city will need to identify other money.

    NRP Phase II will have to work differently than in the past, with more controls over spending to avoid neighborhoods spending their allocation faster than the existing revenue stream.

    Several neighborhood organizations, including Stevens Square Community Organization and the Whittier Alliance, are beefing up outside fundraising efforts, anticipating reduced NRP money.

    The Whittier Alliance recently held a community meeting to change its NRP Phase I plan, shifting money from other programs so it could pay for staff and operating costs in 2002. It set an aggressive goal to raise $77,700 from foundations and corporate grants.

    Gretchen Nicholls, executive director for the Minneapolis Center for Neighborhoods and a member of the NRP Phase II Steering Committee, said the staff capacity of neighborhood organizations would change dramatically over the next few years as NRP changes.

    "We thought we had 10 years to coast," she said, speaking for herself, not her organization. "Now we will hit the wall more quickly."

    Staff is an expensive part of a neighborhood organization’s budget, Nicholls said. Staff that has developed expertise in housing, safety, and other areas will become vulnerable to reduction.

    Neighborhood organizations will need to look to increasingly competitive private sources if they want to maintain what they have had in the past, she said. Yet the trend is that the "foundations aren’t interested in supporting little neighborhood fiefdoms. They are not going to be there for us.

    "The question will be, can we continue to exist with all these small neighborhood groups, or will there be some efficiencies of scale that would be sensible to try to cluster organizations and combine capacities to allow for maintaining certain staffing functions," Nicholls said.

    One of the big issues facing the NRP Policy Board in the coming year will be the fate of the $16-million ($4 million a year for 4 years) set-aside for affordable housing, she said.

    Challenges facing neighborhoods in 2002 include planning more

    effectively with the city’s affordable-housing priorities.

    Airports: Financial woes undermine sound insulation deal In the wake of Sept. 11 terrorist attacks, the Minneapolis St. Paul International Airport had reduced flights and revenue, Sun Country Airlines hit the financial skids,

    and the Metropolitan Airports Commission (MAC) began delaying

    hundreds of millions of dollars of capital projects in its airport master plan, MSP 2010.

    One question looming for south Minneapolis residents in 2002 is the fate of the sound insulation program, a program to help people under the flight path cope with jet noise.

    Prior to Sept. 11 the program’s 2002 budget was $38.5 million, which could insulate 650 to 750 homes, said John Nelson, manager of the Part 150 sound insulation program. The MAC has since cut the sound insulation budget to $7 million, with a target of upgrading 150 homes.

    Prior to Sept. 11, one of the big debates before MAC was how to expand the sound insulation program to less noisy neighborhoods. MAC made a vague promise to do so in 1996 as part of the deal to gain state approval for airport expansion.

    In August, MAC voted to spend $150 million and agreed to maintain the current benefit level to homes in less noisy areas: new doors, windows, air conditioning, or other improvements to reduce interior noise by an average of 5 decibels.

    MAC knew the money would not cover all newly eligible homes, those in the area where average jet noise is estimated at roughly 60 decibels. MAC said it would start with the worst homes first and go until the money ran out. The decision represented a compromise with residents who said anything less would be a broken promise.

    In December, MAC submitted the plan to the Federal Aviation Administration, which must approve it, said Patrick Hogan, MAC’s director of public affairs.

    That same month, the MAC board voted to rescind its decision, reopening the sound insulation debate, Hogan said. It does not yet have an alternative plan.

    "Some of the commissioners were concerned from a financial standpoint that it might lead to pressure to spend more money than we had," he said.

    Hogan said he expected the MAC board to discuss the issue again at its Jan. 22 meeting.

    Among the bigger changes anticipated at the airport in 2002 are the federalization of security checkpoints and the opening of Concourses A and B and 12 new gates on Concourse C sometime this summer, Hogan said.