Minneapolis leaders say the city’s General Fund is expected to fall below the required minimum balance by the end of the year, dipping into its emergency reserves for the first time in more than a decade.
A city budget chart shows the General Fund forecasted to fall $22 million or more below the city’s minimum year-end balance of $110.4 million, which city financial policy treats as emergency savings.
“This ensures the city has around 2 months of funding to continue essential operations in an emergency,” read the presentation from Minneapolis Budget Director Shawn Greene.
“It’s a serious warning sign, I will say that. But it’s not an immediate financial crisis for the city,” Greene later said, in an interview with 5 EYEWITNESS NEWS.
Greene said this outlook does not mean that the city is running out of money, but it is less protected from an economic downturn or an unexpected emergency. In the mayor’s 2027 budget proposal, the city would raise the tax levy, cut jobs, trim services and encourage the avoidance of drawing down the General Fund any further.
When asked, Greene said the cuts would not immediately impact core city services in 2027. When asked what the impact of the service and job cuts would actually be for residents, if not core operations, he also acknowledged elected leaders are still weighing what counts as a core city service.
“It’s a very fair question, and I think it really comes down to perhaps a subjective question that our elected leaders are asking themselves right now, which is, ‘What do we consider to be a core city service?’” said Greene.
5 EYEWITNESS NEWS spoke with Adam Duininck of the Minneapolis Downtown Council. Duininck said he sees broad risk if the city does not balance cuts with growth.
“That’s how I view it. I mean, all the services are at risk, and everything will be on the table,” said Duininck.
“And that’s just for this year, but if we are thinking about another year or two down the line, if property taxes continue to grow at that rate, my fear is that that will continue to depress other challenges around the city.”
Duininck said he worries that with declining commercial values, residents could face a continually growing tax burden if the city cannot keep investing in growth while also cutting spending.
“For example, having business incentive programs and other things that we’re advocating for-that’s going to be much harder to do if you’re trying to fund core services like police, fire, and emergency response, or street maintenance and filling potholes and that sort of thing,” said Duininck.
Hamline University professor David Schultz, who has taught economic development and previously worked as director of planning, shared a similar view. He said the city needs cuts and reinvestment at the same time.
“The city is getting into really a fiscal trap at this point,” said Schultz.
“It’s got to be cuts along with reinvesting in other priorities, reinvesting in other initiatives … That’s what the city needs to do: free up in some areas and figure out how to take that capital and invest in growth in other areas.”
Greene said the mayor’s proposed budget would not close, or likely begin to shrink, the gap in the General Fund.
Nothing is finalized yet. Department-specific budget presentations are next.
