Budget Committee Meeting Summary - October 20, 2025

The Minneapolis Budget Committee convened on Monday, October 20, 2025, to review departmental presentations related to the Mayor's recommended 2026 budget. The meeting featured presentations from the Health Department, the Youth Coordinating Board, the Information Technology Department regarding the Technology Improvement Plan (TIP), and a strategic analysis of municipal revenue options by Legislative Research and Oversight. Key discussions focused on funding risks from potential federal grant reductions, the preservation of school-based mental health services, cybersecurity vulnerabilities, and the city's heavy reliance on property taxes compared to peer municipalities.

Consent Calendar

• No routine approvals were explicitly listed on the consent calendar during this session; all items were addressed via direct departmental presentation and discussion.

Public Comments & Testimony

• Anne DeGriud (Executive Director, Youth Coordinating Board): Expressed deep concern regarding the financial insecurity facing youth services due to federal funding cuts, specifically the potential loss of 21st Century Community Learning Center grants. She stated that the loss of federal funding threatens the stability of after-school programming and creates safety risks for unsupervised youth. She also highlighted the significant negative impact of cutting the Community Connections Conference, noting that replicating such a collaborative venue would require substantial additional funding.

Discussion Items

Health Department 2026 Budget

• Commissioner Damone Chaplin presented the 2026 budget, noting a cumulative total of approximately $46 million and a slight FTE reduction from 172 to 171.5. He emphasized that the department faces significant risk due to heavy reliance on federal and state funding, which could become vulnerable.
• Councilmember Palmisano: Expressed disheartenment and concern over the proposed loss of 1 FTE for school-based mental health counseling. He requested clarification on how the loss of approximately $300,000 in contractual funds would be handled and urged the department to seek partnerships to mitigate these losses. He stated that schools need more, not less, mental health resources.
• Commissioner Chaplin: Responded that the department is currently working with the administration to salvage the FTE through alternative means. He outlined contingency plans for potential federal grant reductions involving HR and legal teams. Regarding the loss of contractual funds, he noted that these affect maternal and child health and immunization programs but stated that "all options are on the table" to mitigate impacts, including exploring partnerships with the Office of Community Services (OCS) for trauma dollars. He offered to provide a staff memo detailing the specific contractual services at risk.
• Councilmember Vita: Requested a specific staff memo detailing the $291,000 (approximate context from speech, though transcript says $291k/contractual) loss to identify specific programs at risk. She further inquired about the feasibility of partnering with OCS for trauma funding to replace the lost school-based FTE.
• Councilmember Koske: Asked for elaboration on the increase in special revenue expenses from $15.5 million in 2025 to $20.5 million in 2026. Commissioner Chaplin confirmed this increase is largely due to new grants received and will provide further details via staff memo.
• Vice Chair Koske: Inquired about the specifics of special revenue expenses. Commissioner Chaplin reiterated that these funds largely come from new grants and promised to forward the information to the clerk.

Youth Coordinating Board Presentation

• Executive Director Anne DeGriud: Described the board's role in coordinating safety and well-being across four jurisdictions (City, County, Schools, Parks). She highlighted that the board's work is system change rather than purely programmatic.
• Councilmember Payne: Asked about the loss of the Community Connections Conference budget. Ms. DeGriud lamented that this loss is significant because replicating the collaborative inter-departmental event would cost a comparable amount of money, and the youth summit alternative would require different energy and resources.
• Councilmember Rainville: Inquired about the City of Minneapolis' specific contribution. Ms. DeGriud clarified that the City contributes approximately $450,000 total ($360,000 from the general fund and $90,000 joint powers fee), similar to the Hennepin County contribution.

Information Technology Department & TIP

• CIO Paul Cameron: Presented the IT budget ($48.2 million) and the Technology Improvement Plan (TIP). He highlighted that while the IT department is meeting most performance metrics, cybersecurity remains the top risk, particularly ransomware and social engineering.
• Councilmember Palmisano: Expressed concern about cybersecurity, asking how the city is preventing the types of ransomware attacks seen in St. Paul. CIO Cameron explained the move toward "zero trust" architecture to compartmentalize the network and the partnership with the state of Minnesota for threat monitoring, though he cautioned that no entity can be 100% guaranteed safe.
• Councilmember Rainville: Asked about the department's 11 vacancies and whether they mirror last year's vacancies. CIO Cameron explained that while some positions are recurring, the department has struggled to fill offers, with some roles reposted or undergoing internal reorganization. He agreed to a follow-up comparing the specific vacancies to the previous year.
• Council President Payne: Inquired about the status of the Enterprise Resource Planning (ERP) project following a previous budget reduction. CIO Cameron confirmed that the department successfully leveraged a state Master Service Agreement to absorb some costs, resulting in a lower budget request than initially projected, and that they have tightly managed the timeline to avoid further delays.

Municipal Revenue Analysis

• Director Edward Hawkins: Presented a comparative analysis of municipal revenue sources. He noted that Minneapolis is ranked 9th out of 10 peer cities in per capita revenue generation and is heavily dependent on property taxes (projected to exceed 50% of general fund revenue). He highlighted limitations imposed by state law on creating new taxes.
• Councilmember Cashman: Expressed support for expanding the downtown taxing boundary to include the North Loop but noted prior support for lowering the F&B rate to make downtown more affordable. She asked for clarification on current property tax exemptions for religious and nonprofit institutions and inquired if peer cities utilize land value taxes. Director Hawkins offered to provide a follow-up on specific exemption categories and confirmed that some peer cities use land value taxes, though state authorization is required.
• Councilmember Palmisano: Clarified that special service districts currently do not generate surplus revenue for the city and questioned if bag fees in other cities go to the city. Director Hawkins confirmed that in other jurisdictions (e.g., DC), bag fees are directed to specific city funds, whereas Minneapolis currently does not capture this revenue. He reiterated that Minneapolis has very limited authority to pursue new taxation without state intervention, suggesting "Payment in Lieu of Taxes" (PILOT) programs as a potential voluntary alternative, similar to Boston's model for exempt institutions.
• Council President Payne: Emphasized the critical need to diversify revenue beyond property taxes and expressed intent to collaborate with the Intergovernmental Relations (IGR) committee to navigate state legislative barriers.

Key Outcomes

• Action Required: The Health Department and IT Department have committed to providing staff memos regarding specific at-risk contractual services, special revenue expense breakdowns, and a vacancy comparison analysis.
• Budgetary Constraints: The Health Department faces a 2% budget reduction target, primarily impacting contractual services, with one school-based mental health FTE currently proposed for reduction pending administrative intervention.
• Strategic Direction: The committee acknowledged the urgent need to diversify municipal revenue streams due to the city's 9th place ranking in per capita revenue and heavy reliance on property taxes, with further discussions scheduled for November to review specific tax and fee strategies.
• Adjournment: The committee adjourned with a plan to receive final departmental presentations from the Climate Legacy Initiative and Capital Budget office on October 27, 2025.