Mayor avoids layoffs in plan to ride out state’s latest aid cut
Minneapolis Mayor R.T. Rybak paused for applause April 8 after announcing in City Council chambers that his 2010 supplemental budget, drafted after another $9.2 million reduction in state aid, would not require layoffs.
“Our city employees have withstood a tremendous amount of transition and pain because of these state aid cuts, and we deeply appreciate their work,” said Rybak, also a gubernatorial candidate.
The most recent aid cut came on top of a $21 million reduction in state funding made last year. Gov. Tim Pawlenty initially proposed the newest cut to be $29 million, but the Legislature softened the blow. The latest curtailment actually totals $10.9 million when the Minneapolis Park and Recreation Board and Municipal Building Commission are included, but the bulk of the hit targets the city’s general fund.
Minneapolis has slashed more than $30 million from its budget since December 2008, Rybak said. He said the city has been able to endure the carnage by maintaining reasonable reserves, planning ahead, setting clear priorities and taking action.
“So we face a real tough challenge, that’s the bad news,” Rybak said. “But the good news is that we have been prepared.”
Last year, the city moved $4.5 million into a contingency fund to help deal with this year’s cuts. It also has $9.5 million in one-time revenue from tax-increment financing districts and budget reductions made beyond the state’s aid decrease in 2009.
The contingency fund, $3 million in one-time revenue and roughly $1 million in spending cuts is how Rybak proposed filling the state-aid hole. The spending reductions involve eliminating vacant positions, trimming supplies, technology and training and finding more efficient ways to do business.
Rybak also proposed using $2.8 million of the remaining one-time revenue to avoid pension debt and the final $3.7 million for “innovative” efforts including completion of the wireless network, pothole filling and seal-coating, business-process improvements, new technology and a retirement incentive. More details on the incentive will be rolled out soon, Rybak said, but it’s aimed at getting emerging young professionals into the city’s ranks — the people who have been the target of layoffs in recent years.
“There is going to be some pain,” Rybak said of his plan. “But it’s going to accomplish our main goals, which are to take immediate action that helps the long-term budgeting to maintain our services as much as we can to the residents we have and to save jobs.”
Rybak said the city’s financial future is very much linked to the state and he warned of tougher times to come. He also took a moment to address criticism of the city’s handling of its budget, noting that state spending has increased 56 percent since 2001, while city spending has increased 7 percent. He referenced several credit-rating agencies as well, pointing out positive reviews of the city’s financial practices.
“I have to say I’m a little bit frustrated this [cut] is being done while we have significant criticism from some at the state about the financial practices of the city, including by the way, some very significant criticism of the very budget reserve that we are using to weather this storm today,” Rybak said.
Looking ahead to 2011, Rybak said the city’s challenges include reducing pension debt, rising healthcare costs, growing demands on infrastructure and a “critical need to dramatically lower property taxes.”
He thanked City Council members and staff for their work during the tough times.
“This is a short-term solution to a long-term problem,” Rybak said. “But it is being done with the same long-term fiscal stewardship that has gotten us into this good position.”
The council is expected to vote on the budget revisions on April 30.
Next up for Rybak: the Democratic-Farmer-Labor Party’s state convention April 23–24, where he’ll mostly likely battle House Speaker Margaret Anderson Kelliher, also of Southwest, for the party’s endorsement for governor.
Reach Jake Weyer at 436-4367 or [email protected]