Hodges' 2015 budget calls for 2.4 percent levy increase

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August 14, 2014 // UPDATED 11:07 am - August 15, 2014
By: Sarah McKenzie
Mayor Betsy Hodges delivers her 2015 budget address.
Photo by Sarah McKenzie
Sarah McKenzie

Mayor Betsy Hodges has proposed a 2.4 percent tax levy increase for 2015 — an increase accounting for inflationary pressures that would bring in an additional $6.7 million in tax revenue for the city.

“We must catch up with inflation if we wish to keep our basic services — already cut to the bone — functioning,” she said.

The mayor said that even with the proposed tax increase, about half of the city's residential properties wouldn't see a tax hike and some taxpayers would have a reduction in tax bills. 

Hodges outlined details of her proposed budget during a nearly 40-minute speech in City Council Chambers on Thursday. The city’s budget is roughly $1.2 billion.

She began the address by saying: “Well, Minneapolis, now we get to put our money where our votes were.”

Throughout her first term she has emphasized her commitment to racial equity. Her proposed budget includes funding for two new positions in the City Coordinator’s office focused exclusively on equity work.

“This marks a watershed moment in Minneapolis’ history — leadership who were elected on platforms of racial equity and disparity elimination now invest in that work from the heart of the organization outward, intentionally and deliberately,” she said. “It is from here that the rest of our work to make this community about and for everyone in it will flourish.”

She also highlighted her Cradle to K Cabinet, which is focused on three priorities — making sure each child in the city has a healthy start, access to child-development-centered childcare and stable housing.

The mayor also wants to invest $70,000 in educational support for parents of teens in an effort to reduce youth violence, substance abuse and risky sexual behaviors. 

Hodges has proposed spending an additional $1 million in affordable housing compared to the 2014 budget, which would fund the Affordable Housing Trust Fund at $9.1 million, said Hodges' communications director Kate Brickman.

A group of affordable housing advocates in attendance for Hodges' budget speech wore green stickers calling for $20 million for affordable housing in the 2015 budget. A flier circulated by the group noted that nearly one out of every 10 children in Minneapolis Public Schools are homeless or highly mobile, which translates to more than 6,000 students. 

Hodges has also proposed a new initiative that will help more minority residents become home owners in the neighborhoods hardest hit by the foreclosure crisis.

Hodges' budget also includes an additional $75,000 for the city's popular STEP-UP program, which matches low-income youth with summer internships. City officials are celebrating this year's interns and employers at a special celebration at the Guthrie Theatre Thursday afternoon. In its 11th year, this year's program matched 1,650 youth with internships at 230 employers around the Twin Cities. 

As for public safety, she has proposed funding for an additional 10 officers to bring the Minneapolis Police Department’s officer count to 860. She has also included $1 million a year for community service officer classes of 20.

The proposed budget also includes $1.14 million to implement the police body camera program.

Fire department funding includes $800,000 for two recruit classes in 2015 and an additional $50,000 for the department's Fire and Emergency Service Explorer Program — a recruiting program in Minneapolis high schools. 

As for infrastructure investments, she highlighted a commitment to include $3.5 million to fully fund the renovation of Nicollet Mall and $750,000 for the city's network of protected bike lanes. 

“When we voted last fall we knew it would take all of us putting our shoulder to the wheel to get where we want to go together. We knew that all of us do better when we all do better,” she said in remarks at the end of the address. “That’s what this budget does – intentionally and deliberately moves us forward together to our best future through investment in ourselves. When we voted last fall we knew it would take investment in our people, our infrastructure, and our future to get where we choose to go together. It starts now.”

Hodges' proposed budget will now be reviewed by the City Council during a budget review process that takes place throughout the fall. The Council will vote on adopting a final budget in December.

The Minneapolis Board of Estimate and Taxation will also hold a hearing later this month to discuss the proposed levy increase, and then hold a meeting in mid-September to set the maximum property levy. 

Two public hearings have been tentatively set for Nov. 18 and Dec. 10 at City Hall to give the public a chance to weigh in on the proposed 2015 property tax levy and budget. 

Only properties that have seen values increase more than 7 percent in the last year are likely to see tax increases, according to the mayor's office. For instance, a home valued at $175,000 in 2014 that has had a 10 percent increase in value would see a property tax increase of about $31 for the year. 

City Council President Barb Johnson said she needs to spend more time doing a "deeper dive" into the budget details before offering her impressions of the proposed budget. She said there's some confusion about Hodges' proposed spending increases for the police department and whether the 2015 budget really increases the MPD's capacity.

She also wants to spend more time analyzing the city's revenue streams to see whether the levy increase is necessary. She noted that the improved economy, increases in Local Government Aid (LGA) and sales tax revenue are bring more money into the city's coffers.

Johnson also offered praise for Hodges' commitment to investing in the city's STEP-UP summer internship and Urban Scholars program.

"Those are two things the city does that are clearly helping young people of color," she said. 

In 2013, 92 percent of the STEP-UP interns were minorities, 50 percent from North Minneapolis and 30 percent recent immigrants, according to the city's Community Planning and Economic Development (CPED) department. 

City Council Member Linea Palmisano (Ward 13) called Hodges' address "thoughtful."

"It importantly has an eye on the long-term needs of our city from a financial perspective," she said.  "Not everyone is going to get what they want so I think it starts to strike a balance. ... From the macro-view, I like the mayor’s development suggestions because the stress around property taxes in the 13th Ward will be best alleviated when we are able to see property values in other parts of our city rebound.  Until then, 13th Ward property owners whose land value has rebounded very quickly over the past couple of years will be feeling the property value increase perhaps more than a 2.4 percent tax increase."

Palmisano said she's also excited about the citywide expansion of organics recycling noted by Hodges during her speech. 

City Council Member Lisa Bender (Ward 10) said she was impressed with the mayor's big-picture vision for the city.

"I was very happy with the high-level values reflected in the mayor’s budget, including a commitment to closing gaps in racial equity, to building and maintaining a fully accessible bicycling and walking network, and a strategic approach to basic needs including our police, fire and road maintenance investments," she said. "I would prefer to see a lower levy increase but look forward to delving into the details when they are available."

 Carol Becker, a member of the Board of Estimate and Taxation, said she hasn't had a chance to review Hodges' budget in detail, but is disappointed the tax increase is higher than the inflation rate.

"Hopefully we can bring that down with the City Council's process because this is just not sustainable," she said. 

David Wheeler, Park Board Vice President Anita Tabb, Hodges, Council President Johnson and City Council Member John Quincy also serve on the Board of Estimate and Taxation.

Minneapolis Downtown Council CEO Steve Cramer gave Hodges high marks for her 2015 budget plan. 

"I thought Mayor Hodges very effectively translated her three priority themes — equity, growth and government effectiveness — into budget priorities," he said. "She also painted the best picture I have heard from her to date about how those themes are related and mutually reinforcing. The Downtown Council is very supportive of her $3.5 million commitment to the Nicollet Mall project."

The 2014 Minneapolis budget included a 1 percent cut in the property tax levy — the first time R.T. Rybak had a budget that cut taxes in his 12-year tenure as mayor. In 2013, the City Council approved a 1.7 percent levy increase. From 2002 to 2008, the annual tax levies were 8 percent. 

Hodges has the benefit of crafting a city budget as the city's economy is rebounding from the severe recession and LGA has increased compared to levels when Rybak was mayor. 

The city's revenues come from a wide variety of sources, including property taxes, state funding, various tax revenues, license and permit fees and charges for services, among other things.  

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At a Glance: Property Tax Levies since 2002

2002       8%

2003       8%

2004       8%

2005       8%

2006       8%

2007       8%

2008       8%

2009       1.8%

2010       7.4%

2011       4.7%

2012       0%

2013       1.8%

2014       -1%

(Below: An overview of the 2014 Minneapolis budget. Note: A detailed 2015 budget hasn't been released.)