CIVIC BEAT // Special session brings good, bad news to Minneapolis

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August 1, 2011
By: Nick Halter
Nick Halter
A $23-million cut in state Local Government Aid payments to Minneapolis has triggered several city budget cuts, including reductions in funding to the Fire and Police departments and the street paving program.

The LGA cut was revealed to Minneapolis leaders after a special legislative session held in mid-July. A special session was needed after Gov. Mark Dayton and the Legislature failed to reach a budget compromise during the normal session that ended in May.

The special session brought a mix of good news and bad news to
city leaders.

Reduction triggers cuts

The City Council already was preparing for reductions in state aid in December. It did not know how deep LGA cuts would be, so it prepared a “waterfall” of budget cuts. A deeper LGA reduction would trigger deeper city budget cuts.

The city had been certified to receive $87 million in LGA, but will get $64 million instead.

The city will cut $6.2 million from its street paving program — halving the paving budget — as well as $1.35 million from the Police Department and $1.45 million from the Fire Department. The city also will delay a $7.1 million payment that would have reduced its pension debt.

Assistant Fire Chief Cherie Penn said she did not immediately know how cuts to the Fire Department would be dealt with. One waterfall item was $700,000 to backfill the potential layoffs of 10 firefighters, and the city was preparing to remove that from the budget in July.

The city had eliminated 80 positions before the LGA reduction.

“We are cutting much-needed street paving despite this year’s record numbers of potholes,” Mayor R.T. Rybak said in a press release. “We are slowing our debt repayment despite the fact that doing so has helped restore Minneapolis’ AAA bond rating and save taxpayers money. And we are cutting positions from Police and Fire despite achieving record-low levels of crime this year.”

Pension merger

Pension relief has been an important task for city officials. Closed pension costs were expected to consume $40–$45 million from the city budget in coming years.

The Legislature agreed to allow two closed pension funds for Minneapolis police and firefighters to roll into a state-managed plan. The merger still needs approval from both funds and the City Council. The city estimates a merger will save taxpayers $21 million in 2012.

City Council member Betsy Hodges (13th Ward), the chair of the city’s budget committee, said the merger bill that was passed in special session was not the same as one brought forth by the city. Most notably, it will not provide as much long-term tax relief as the city sought, she said.

Bonding brings a few local projects, including Plymouth Avenue Bridge

The Legislature passed a $500-million bonding bill for constructions projects across the state. Included in that bill was $33 million for bridges.

City lobbyist Pierre Willette said he was told by Gov. Mark Dayton that Minneapolis would get funding from that pot of money to repair the Plymouth Avenue Bridge, which has been closed since October due to corroding internal cables.

The bridge project has already received $2.1 million in disaster funding from the Minnesota Department of Transportation. The total repair cost was originally expected to total $7–$10 million, but project manager Jack Yuzna said the city’s consultant now believes it will be less.  

“It will be a nice [cost] reduction,” he said. “It’s good news.”

If funding is passed soon, Yunza said the project could go out to bid this fall and work could begin in spring 2012. Once the work begins, it will take to three to four months to complete, Yunza said.

The Coon Rapids Dam was awarded $16 million in funding to make improvements to prevent invasive Asian carp from reaching northern Minnesota. Minneapolis officials have been warned that the federal government would consider closing either Upper St. Anthony Falls lock or the Ford lock if Coon Rapids could not block the invasive carp, which is capable of destroying fisheries.

The state also awarded $51 million to the University of Minnesota for a new nanotechnology center and $12.5 million for mitigations at the university’s labs near the Central Corridor light rail transit line.

Hennepin County got $4.7 million for a 911 communications center as well as $1 million for an African-American history and cultural center.

Metro Transit avoids service cuts, fare hikes

Facing a $109-million cut to transit funding, the Met Council began preparing for service reductions and fare hikes.

But the cut was reduced to $52 million from $109 million, and Met Council Chair Sue Haigh said Metro Transit won’t have to cut service or raise fares. Initially, Met Council officials said they were considering raising fares by 25 or 50 cents and reducing service by 25 percent.

The $52 million cut is a one-time cut. The $109 million proposal was permanent. The Met Council plans to use several one-time measures to fill the gap.