Good evening. Welcome to this regular meeting of the Minneapolis Board of Estimate and Taxation for June 10th, 2026. My name is Steve Brandt. I am the president of the board. Before we begin the meeting, I will ask the clerk to read a friendly reminder on diction for
the benefit of those who uh access our meetings through different means. Before we begin the meeting, I want to offer a friendly reminder to all members, staff, and the public that these meetings are broadcast live to enable greater public participation.
These broadcasts include real-time captioning as a further method to increase the accessibility of our proceedings to the community. Therefore, all speakers need to be mindful of the rate of their speech so that our captioners can fully capture and transcribe all comments for the broadcast. We ask all speakers to
moderate the speed and clarity of their comments. At this time, I'll ask the clerk to call the role so we can verify the presence of a quorum. >> Commissioner Chuktai >> present. >> Fry is absent. Olsen >> here.
>> Payne is absent. Vice President Bernstein >> present. >> And President Brandt >> present. >> There are four members present. >> All right, we have a quorum. Uh, I will now offer an acknowledgement that we meet today on land that has historically
been in the ha uh in the possession of the Dakota and Ojiway peoples and acknowledge the historical trauma that resulted from their dispossession of that land. We'll now proceed to our agenda, a copy of which was posted for
public access on the city's legislative management information, excuse me, legislative information management system, which is available at lims.minneapolis.gov. Uh board members, the agenda for today's meeting is before us. May I have a motion to adopt the agenda?
>> So moved. Second. >> All right, we have a proper motion before us. Is there any discussion? All those in favor say I. >> I. >> Opposed? Nay. Okay. The eyes have it and the agenda is adopted. And since I forgot to bang the the gavl, I will do
so now. There we go. Uh, next is the acceptance of minutes from the May 13th regular meeting. May I please have a motion to accept the minutes? >> Second. >> All right, we have a motion and a second. Uh, proper motion before us. Is
there any discussion? All those in favor say I. >> I. >> I. >> Opposed? Nay. Okay. The eyes have it and the minutes are accepted as presented. Item number four on the agenda is the acceptance of pro public comment. Um
the it's the board standard to receive comment on any of the agenda items on today's meeting. Uh clerk informs me that we have no one who has signed up, but as a reminder, anytime you see something on the agenda that piques your
interest or you want to sound off on, you can come to our meeting and uh sign up and speak for a couple of minutes. Uh so, uh up first, uh move on to item number five, discussion item. uh as are
all of our items today. Up first is the park board's 20-year neighborhood park plan annual report. And to give that update is uh the park board's finance director, Julie Weisman. Welcome, Julie.
>> Good afternoon, President Brandt and board members. I'm Julie Weisman. I'm the finance director for the Minneapolis Park and Recreation Board and I'm here to present the ninth annual report of
the 20year neighborhood park plan. And so this is the ninth, meaning that 2026 is our exciting 10th year or halfway through the 20-year plan. And I'm sure
that all of you have seen the wonderful work that this plan has financed uh throughout our park system in our neighborhood parks with our capital improvement program, our rehabilitation
program, as well as the increased service levels in our operations. So, the 20-year park plan is a historic agreement between the city of Minneapolis and the Minneapolis Park and Recreation Board. Concurrent ordinances
were adopted in 2016 that established the plan and provided an additional almost $11 million a year for 20 years for neighborhood park maintenance, rehabilitation, and capital improvements.
Starting with our operations, maintenance and repairs. Uh the funding increase in 2016, which started in 2017, was $3 million in uh increased property taxes to improve our
service levels and our operation maintenance and repairs. That has grown by the property tax levy increase since 2017. And in 2026, uh, that amount is 4.58 million. The
amount of 4.43 million in 2025 was fully spent on uh those areas in our neighborhood parks. Our 20 our guaranteed annual minimum amount uh for
capital and rehabilitation is shown here with 2025 being 12.69 million. We are required to uh prepare this annual report and present this uh in
accordance with the NPP20 ordinance. This report reports on the results through December 31st, 2025 and the information includes 2024 through 2026.
Again, the history and background for a guaranteed minimum amount. It started at 10.5 million. There are adjustments that happen every five years and that adjustment occurred last year which sets
the amounts for 2027 through 2031 and it was adopted by concurrent resolutions and you can see the guaranteed minimum amount uh for 2027 to 2031
it increases uh 4% annually. I'm now going to turn this over to Assistant Superintendent Michael Schroeder of our planning operations and he will provide this next section of the report.
>> Thank you, Director Weissman, uh, President Brandon, members, thanks for having us here. Uh, I will walk through the capital and rehab program and kind of outline the program over the last three years and with some qualifications as I as I move through this. Um, if you look closely at our budget, you'll note
that we provide an outlook over a six-year period, which is our capital improvement program or CIP. Um, according to our ordinance, we apply that we we create that CIP for neighborhood parks and actually now for regional parks as well using an equity ordinance where we assess uh the the
neighborhood parks on community and park characteristics every year and redefine the rankings of each park. Um, we have indicated that every park that we have, including both developed and undeveloped parks, will have improvements during the term of the 20-year park plan. Um, in
fact, as I was mentioning to President Brandt, we will likely get through the first round of parks, including every park, by 2034, 2035, which means that some parks may receive a second uh improvement through this process. I'll note that as you if you were to go
through that CIP um projects that even though the equity rankings may change every year once a project is identified once a park is identified in the CIP it stays in the CIP and that in that sequence uh regardless of its subsequent ranking the the equity rankings do
change not a lot but they they can change every year. [clears throat and cough] I'll walk through both the rehabilitation portion of the program and the capital part of the program. The rehabilitation program uh is intended to
as the dot points indicate to enhance park safety. There are things related to critical codes and regulations. We have a major allocation to improving facilities under the ADA to meet those requirements. Um address critical failures. Again, just before this
meeting, President Brent was asking me about uh uh something we discovered like immediately upon uh approval of the 20-year neighborhood plan, which was a cracked roof beam, a significant failure of a of the roof at Longfellow, which was our first project. And if you go to
the day, if you see this kind of uh uh wrap of steel and bolts around one end of the of the of the roof beam, it's very visible. We should put a plaque on it for MPP20. Um, we we we also look at this as a way to focus on those features that are most need of repair,
recognizing that not only are these are we trying to meet regulations and update things that have experienced some kind of failure, but we recognize that through the term of the 20-year program, some parks will naturally fall towards the end of the program, but they have assets that need attention earlier on.
And so the rehabilitation program also allows us to make some investments in those assets that get used uh frequently and that have fallen into disrepair so that we can get by until the capital program actually starts. Um the process for identifying those rehabilitation
projects means we go out to the parks every year not only to do the uh equity uh uh assessment but also to look at the inventory and condition of all the assets in the park to look at their condition and identify those things most in need of repair put them on a list and
rank them for some kind of prioritization. Um the prioritization typically stays unless something jumps up because of some other critical failure. We keep pecking away at that list of of uh rehabilitation repair needs as we move through the process as
as as the dollars allow. Um the the the re rehabilitation um summary from 2024 as it's summarized in the report that we provide identifies um in this case there are uh nine different
categories. We've actually added a category a couple years ago to to add um originally nine categories. Now we've added uh athletic fields as a rehabilitation uh factor. Um and you can see in in this chart and there are similar charts for
rehab 2 and for the the 2024 25 and 26 um the amounts that have been allocated and the amounts that have been expended. And you'll see that we have nearly expended all the funds allocated in the rehab funds for 2024. And you see the number of projects that have been
undertaken either through contracted forces or the park board's own staff at the bottom right of this slide. Um you'll note that as we move into 2025 that the percentage um completed or allocated reduces somewhat. That's because some projects are still in
process. But if you look at those that have been completed, we are now at 18. Um, by the by the and it's important that this report was prepared as of the conditions of the end of 2025. This number, if you were to compare it based on where we are in June 10th of 2026,
would be significantly higher. And this is 26. Um, and of course, as I just mentioned, we uh track things for this report through the end of 2025. So we don't have things even though there are projects in progress we don't have things tracked uh under the rehab for 2026 and you'll see this is the same
situation we come to as we move through the capital categories [clears throat] the capital investment piece of this is the investment in new assets in the park and it's based on the equity ordinance that I mentioned earlier every year we go through the the
the the neighborhood parks and we evaluate them establish a ranking and then allocate those funds so so that we can continue moving through parks on a on an annual basis. It's important to recognize as I move into the next several slides that there's a sequence
of actions that we undertake related to capital improvements. It begins with as as indicated in in the the green portion of this diagram at the bottom. [clears throat] Community engagement, lots of community engagement and scoping. Even though we have long range plans guiding how the park should be
changed, we want those sometimes those plans are five or eight or 10 years old. We want to go back and make certain that we're implementing things that are still relevant to the community. Um, we move through a period of preliminary and final design, putting together documents, bidding or essentially procurement and that allows us to move
into on a third year the implementation and uh completing completing of the work. Um, it's interesting we were talking this morning with the with I was talking with Superintendent Bengor and other members of the executive team. This summer we'll have more than 20 openings of parks that have had capital improvements. a significant number of
improvements happening all across the city. So when we look at this, it's important to recognize that there's a three-year cycle that we move through with a significance amount amount of time directed to engagement that actually sets the stage for what we actually implement. This is the list from 2024.
Um, and so this is where we probably have some projects lagging a little bit. You'll see that some like Franklin Steel Square Park that has an opening like this week. Um, so that actually has moved from 0% to 100%. This project would have started in 2024 had we had
staffing and been organized to do it. We actually started and moved through. So that project is now opening. So now this number as of June 10th would be higher than 63%. 2025 it's a little bit less but even as you go through here, Ottabon Park had an opening just last week. Um, we have
other other openings that have uh moved through here. There are some things like I'll I'll note the East Phillips Park plan. That's one when we did the long-term plan. Uh we didn't feel we got the engagement we needed from the community during that level of planning.
So we went back and did a significant amount of additional planning work related to East Phillips Park and Cedar Field Park. We now have a a long range plan adopted and are moving through the process of making improvements to each one of those. So those projects will
come online uh faster now that we have the the plan adopted. And 2026 was a unique year for the park board. Um we embarked on a project a few years ago to implement a new recreation center at North Commons um to provide
the funding that actually I think spurred other funders to come in and join us in a major effort uh at $45 million. the park board directed um the resources of the NPP20 program for an entire year to that project. Um and that
will that's on um track to open in 2027. Um there's also um projects that we're trying to catch up on from years previous. Um and the these things are actually moving through fast. But I think the the the maybe more important
part of this is the bottom summary of the budgets that's that have been allocated um in the years pri prior to this report um indicating the the amount of dollars percentage of dollars invested in 2020 21 22 23 and 24 both the rehab and capital portion of this
program and that's where you begin to see the breadth of improvements that have happened across the city under this program and uh director Weisman and I will stand for questions. >> Uh before we address you with questions,
I'd just like to acknowledge that Commissioner Payne and Commissioner Fry joined the meeting some time ago, so we now have a complete compliment. Are there questions? Mayor Fry. >> Thank you, Mr. President. I didn't
notice new nicollet uh in that list uh but maybe I missed it. >> Um President Brent, Mayor Fry, so very good point. So we have been working with staff to try and define how this would happen. Um and there will be actions coming I think to both governing bodies
of both organizations to put that into the CIP to align with the opening of development at new nicollet. It will require us to um work with the city to advance funds that would be otherwise allocated in 2032 which is the would be
out year of the upcoming CIP and move those funds into 2028 so we could be opening along the same timeline. >> So if if it's in the CIP, are you saying it would also part be part of the the overarching NP plan? >> Correct. That's correct. >> Okay. Thank you.
>> Other questions? Commissioner Bernstein. Thanks for the presentation. Um I just could you say again the selection nomination process for the repairs? I caught it for capital investments but >> I I will back up through there. >> Um so repairs and rehabilitation are
based on the the core asset condition. Um recognizing that in some cases they if they're like in need of immediate repair but we have a capital project, we will roll that project into the capital project. So if there's a a failure of the the beam as I mentioned earlier that
actually is identified as a critical need and we look across now the 10 categories of rehabilitation which can be adjusted by staff every year to allocate more dollars if we see that there's uh another critical failing roof. We will direct more dollars into that in a year so that we can
accommodate those things. So the repairs and rehabilitation is really identified on the condition of of the asset and the immediate and the immediacy of the need for repair. >> That's super helpful. And then just to follow up, you mentioned like things getting added and ticked off. Do you
have a sense just off the top of your head of how quickly are they getting added versus taken off? Like how is the money doing at keeping those? Oh, uh, President Bren and, uh, Vice President Bernstein, um, with one one of the the odd things about having all the funds
directed to one project in 2026, it has allowed us to catch up on some of the backlog we've had as we try to continually move projects forward. So, the North Commons project is not just a benefit for um the the North Side
community, but it's also allowed us to catch up on things we've been behind on, and it may be part of the reason that there are so many openings happening this summer. >> Good news. Thanks. >> Yeah, thank you, >> Commissioner Olsson. >> So, you know, you mentioned obviously the black backlog and and catching up
and we wouldn't have that backlog, you know, if we were, you know, at kind of a fully staffed level. um about you know how much kind of you know behind would you say in and number of planning staff to be able to efficiently and adequately keep up with these spaces would you say
we are at and you know I know we have a lot of parked education funds which are a different story but you know sitting around waiting for those planning uses. Um, President Bryant and um, President Olsson also, um, let me address it kind of in two ways because the parkland
dedication funds factor significantly into projects that we have that are on in the CIP based on the equity metrics. If there are funds in a in the neighborhood portion of the parkland dedication funds, it's most efficient for us to add those to already allocated funds so that we have a single project
with a single project manager happening at a single time. So, um, that is not necessarily the cause of any backlog or shortage of staff. It just allows us to use the same resources to get a little bit more done using the same project management techniques we would normally
do. Um, to get to your specific question, this was a question that was raised by a previous set of commissioners as they were going through budgeting. Um, there was an idea that the planning staff would be augmented by three more people. uh what we call design project managers essentially
people leading these kinds of projects in both the neighborhood and the regional park system. Um so that was several years ago we have not had an allocate additional allocation of staff to planning since then. >> Thank you. >> Additional questions? Uh Commissioner
Payne. >> Uh thank you President Brent. [clears throat] I think we've talked about this in the past. uh gap in KOMO and I know that the grand rounds is supposed to be connecting the grand rounds is supposed to be a way of closing that gap. Uh and I was curious how that fits into this overall planning
cuz I know that one of the biggest barriers to completing the grand rounds is, you know, in the 140 years of attempts is just our ability to acquire private property and I feel like that's such a different category than some of these other capital investments. So I'm not entirely sure how we might account
for that. Uh, President Brad, vice president or president. Um, the process for the grand rounds is partly using um it it would fall within the the uh regional park system, but we can develop uh things like I think we've been
calling it Komal Creek, which is a short area of land on the west side of a university parcel. Um, and so that's a a we can we can do that as part of our um Grand Rounds Missing Link Capital project and it's in the planning works now. We have an approved plan. We're
actually moving forward with several segments of that and trying to keep the Koma Creek project as a high priority. Maybe not in the first stage um but most likely in the second stage. We already have agreements with the University of Minnesota for uh the allocation of a
strip of land along the west side of that property that's at KOMO and 27th. The plan calls for a vacation of a street that the the the kind of dual 27ths that run through there. Um and the university is supportive of that. And as
we move forward, we'll be coming to the city and trying to work with them on that street vacation so we can get a more significant park established there. That's important from the perspective of the whole um of the northeast district. Um when we do our long-term planning, we
identified areas where there is a deficit of parks. That's important not only to the neighborhood, it's important to the system. When you look at our uh what's called the park score ranking, that factors into it. So, having the Grand Rounds missing link completed, having the Koma Creek project advance,
those are falling in park gap areas and they'll significantly en enhance our ability to deliver park services. We've also been uh meeting with um uh a few neighbors around Tuttle School and uh we've met with the developer about the
potential for having some park space there. The ability for us to develop another um full well or powder hornsiz park is not going to happen in these fully developed areas. But if we can find ways to develop parks that are smaller but maybe um better dispersed
through the neighborhood, we can achieve a far better level of service. additional questions. All right. Um I have three. Um you I'm trying to grasp a little better the guaranteed reopener every five years to
account for inflation. Um [clears throat] if it's set every five years, I see that the numbers are inflating each year. So is it set for each of those five years individually? Um, President Brandt, the we we work
with city staff to identify uh what we anticipate to be the escalation over that 5-year period. We engage a consultant to help us understand uh trends in the construction market. Uh we look at, you know, past inflation rates and projected inflation rates and we
come up with an agreed upon escalation. And if I recall correctly, it's 4% per year for each of the years until we get to the next adjustment mark. Okay, thank you. U I also recall that several years ago the park board was before this board
uh making a pitch for um a position of asset manager and I wondered if uh in connection with some of the work that's going on with the NPP20 and your overall system. Did that position ever get funded? Uh, President Brandt, I believe
it did. And I believe that position that was uh, my colleague in environmental stewardship and I were competing for the positions and I believe we ended up directing that position uh, to assist with the management of assets in on the operations side of the system.
>> Okay. Thank you. Um the last item is not really a question but more of an observation that at least four of us um from myself to the right are heavy users of the regional park system and um
have wondered what's going to happen in terms of funding the needs of that system and I just would ask that when the superintendent returns in I believe it's August uh to make the presentation to us about the parkboard budget uh
proposal that even and levy that even if [snorts] um the discussions aren't concluded they can update us on whether there's been any discussion about ways of achieving additional revenue uh beyond looking to St. Paul which is the perennial answer that never seems to pay
off. So um I'll just throw that out there for the benefit of the park staff. >> So noted and thank you President Brandt. All right. Uh, seeing no further discussion, I'll ask the clerk to receive and file that report. Uh, next
item up is the budget director update on the 202728 city budget and sources of revenue. And we will call forward finance staff who will introduce themselves. >> Excellent. Thank you, President Brandt,
Vice President Bernstein, commissioners of the BET. My name is Justin Carlson. I'm the budget manager in the finance and property services department. I'm joined today by deputy chief finance officer Jane Denza and principal budget evaluation analyst Ben Zimmerman. We're here to present on the 2027 2028 current
service level budget calculations. First like to take this opportunity to thank our budget team who have done incredible work going back to January to get us to this point. On top of our annual exercises, they've also been implementing a brand new budget platform for the city clear gov. So it's been a very busy season. So, thank them for
their work. And I'm also pleased to introduce the city's new budget director, Shawn Green. Shawn joins us as he was most recently leading a team in Washington DC and the National Geospatial Intelligence Agency. We're excited to have him here with us in Minneapolis and I'm sure he looks forward to presenting to the BET in the
future. He just completed a week one here at the city. Before I jump into the agenda for today, I'll note that this presentation covers the estimated revenues and expenses for next year's start to the bannual budget, which includes the 2027 budget, which will be
adopted this December, as well as a plan for 2028, which will form the basis for the 2028 budgeting process. The CSL calculation is an important reference point to the budgeting process required by safe financial policies and the charter to show revenues and expenses
where policymakers to take no action to increase or decrease the budget. This presentation was also given to the budget committee this past Monday. This is a brief walkthrough of our plan for today. We want to take you through the budget building blocks so you understand the journey of the budget
process from December of 2026 to now. We will review expense drivers and why we're seeing the numbers we're seeing specifically within the general fund. We will close things out with a revenue forecast and next steps in the budgeting process. While this is a technical presentation focused on the 2027 and
2028 CSL, you can expect to hear more information on department programs when we present to the budget committee this fall. Throughout these slides, you'll see bar charts that show prior year actual spending as well as projections. Historical actuals aren't the focus of
this presentation. Rather, they're here as a reference point. This is a forward-looking presentation on the 2027 and 28 CSL. With that, I'm going to pass it off to Deputy City Finance Officer Jane Denza, who's going to touch on some key financial takeaways.
>> Thank you, Justin. Uh, President Brandt, members of the committee, Jane Denza, deputy CFO. Um, with many decision points to come, this presentation is is just one stop on the process on our way to a balanced budget in August. Finance,
as always, will be working diligently over the summer to refine this data and to incorporate any mayoral recommendations before transmitting a budget to the city council and then in September to all of you. So today's presentation does not include new
decisions. This is a transparency measure. it indicates the starting point before policymaker input. It's also important to provide some guard rails around this information. So, as is typical at this point in the year, not all funds are finalized. Notably,
our capital budget um which constitutes hundreds of millions of dollars is still under committee review. So, the exclusion of those funds from our totals will be noticeable to all of you. that data will be added back for the August recommended budget. Enterprise funds too
are still under review. Um, and as Justin noted, implementation of new budget software has impacted our timelines for finalizing the data and analyzing it. So, we will continue to be validating throughout the summer. As a result of all of those caveats, um what
we're presenting to you are estimates and there will be a focus as is typical again on the general fund. So far when we consider all funds, we are seeing that expenses continue to grow faster than revenues. So we see
expense growth at 3.1% and revenue growth at 2.6%. As we narrow down into the general fund, you can see that's more pronounced. So expenses growing at 5.1% while revenues are growing at 1.9%.
That leaves us um with a estimated gap between a revenue and expenses in the general fund of between 28 and $33 million. It is normal to have a gap between expenses and revenues at this point in the process and that's largely due to
the nature of our current service level budgeting methodology which is spelled out in financial policy. We'll be exploring components of CSL methodology over the next few slides. But it's important to know that while expenses are growing as part of that, the revenues do not grow in a
commensurate fashion. So that gap becomes the problem that we solve alongside the mayor over the summer before transmitting a balanced budget in August. >> Excuse me, Mr. Sense. I may have missed this in your introduction, but uh does
this budget assume um no property tax increase or the property tax increase that's in the 5-year financial direction? >> President Brandt. Yes. So, there are no new decisions here. So, we're working off of what was adopted in December. >> Okay. Thank you.
>> Uh Commissioner Fry, >> uh uh Mr. Senz is right. Uh what it's operating off of is nothing new. Um not necessarily a 0% property tax increase, but no new service, no new
add-ons, >> same as last year. >> Okay. Thank you. >> Can I >> uh Commissioner Bernstein? >> Just wanted Yeah, I think Steve just asked a question. I was wanting to double check. So then in this case, looking at your slide five, it would be everything we're seeing here like the
gap is if we passed a 4.8% levy increase for next year. >> No, no levy increase whatsoever. >> Perhaps respectfully, maybe I can get through that slide. It may become clear. >> Thank you. >> Um, all right. So just to just to get
back to the CSL concept which we are going to get into in more detail. Um the real takeaway here is that personnel costs are increasing as well as internal services. Our internal service charges for things like IT and fleet those are subject to market factors. We all know
inflation and tariff policies are having a real impact on how how uh costs are um being felt across the city. Um, we also are including some increases for the self-insurance fund to reflect recommendations in the actuarial report
preparing the city for any potential risks. So, you have heard from the city controller in prior meetings about the city's fund balance decrease and that is also going to be evident um in that gap. So, because we have fewer dollars in our accounts, our interest and investment
earnings are also down. Um, again, that will be explored in the coming slides here. So, you all preempted me, but that's okay. We'll get to this five-year financial direction. So, you know, we've talked about how this presentation is mostly about the general fund. We are
showing you all of the adopted levies on this slide as a reference point. So, coming into 2027, we had already planned on that total property tax levy of a 5.4% increase. So, 5.4%
more dollars than we collected in the prior year. And for the general fund um which is that row towards the top with the orange arrow that was a 4.8% increase to the general fund collections. So there are a lot of increases that are already baked in
because of that CSL methodology. So we plan that personnel will grow in cost. We plan that you know benefits health insurance is going to be more expensive and we also assume some inflation again for those internal service charges. Um
that being said, we do have to revisit those assumptions annually to see if we've gotten it right and to make any necessary tweaks. So the idea here um if we proceeded with a 5.4% levy as projected, that is where that gap would
be coming in. So our costs as recalculated would be 28 to $33 million higher than that levy. >> Can I Excuse me. >> Sorry. Just wanted to make sure I get this because it'll be easier for me
going forward. So then this and maybe this is a more of a legal question, but so the budget that was passed last year technically included this 5% 5.4% levy increase in the 5-year plan. >> Okay, great. >> Yes. Um through the through the chair,
yes, we always show a long range financial plan to um you know, appropriately plan for the city's financial future. It's not locked in. So what we certify to the county for collection is just the one year at a time. >> Got it. Thank you so much. That's great.
>> Okay. Um this slide just is uh intended intends to show you the scale of the general fund as it relates to other funds. So again, you know, the CIP is not included in these figures. So, the total budget amount is a little bit lower, but the general fund expense
budget is um looking like $744 million, which is about 40% of the overall so far. Um fund descriptions, I know many of you are conversant in those. They are in in the budget book and also in those quarterly financial reports and finance is here to help if you need uh
assistance navigating that. of particular interest to this uh committee perhaps is this slide that gives us a visual of the property tax levy burden over time. So what you see here um on the top blue line you see
property taxes from 2018 on um the red line below it shows non levy revenues and then the green line below that shows intergovernmental revenues which would be local government aid predominantly.
So the story here is that property taxes are taking up an increasing share of the total revenue needed to pay for our general fund expenses because intergovernmental revenues have been quite flat and there's been a little bit more movement in the non- levy revenues,
but those are still relatively stagnant. And so as our expenses grow, as the size of our government grows, as we adjust to new bargaining unit uh negotiations, the property tax levy is picking up the rest of the tab. And finally from me at least a note on
the capital improvement program. So this is currently being considered by the capital long-range improvement committee. Um so what we're showing here is what was adopted in December. So you can think of that planned 2027 column as the current service level for the CIP.
Um the click uh group does a really nice job vetting all of the projects from the city, from the park board, and from the NBC. So we expect that their report will be out in July. And that recommendation is important as we're building out the
recommended budget as well. So a six-year CIP being 1.7 billion or so, um it's a it's a substantial part of the city's budget and a place where residents have a lot of input. And with that, I'll return the podium to
Justin. Thanks. >> All right. I'll first note the CSL does not bind policy makers to any action regarding the budget in the future. Rather, it explains where the budget would sit if we made no changes for 2027. It indicates what the city would
have to spend to maintain programs at current levels with current revenue estimates and known expenditure growth such as changing wage levels and inflationary pressures on internal service costs. Is a calculation and budget methodology. It is not a great tool for retroactive analysis, but
rather it provides a framework for what eventually becomes the adopted budget following policymaker decisions this summer and fall. Without this baseline of the CSL, it can be hard to trace the impact of policymaker decisions. So again, this is a snapshot in time, but the figures do help us understand the
impact of the choices that are going to be made. There are three components that make up the CSL. As you can see on the slide, these are personnel internal service charges. So, fleet, rent, general liability, IT, [snorts]
and the non-personnel such as professional services, training, and office supplies. I'll cover personnel and internal service charges in greater detail on upcoming slides. The non-personnel base budgets are held flat. So, the only adjustments we make to this component is the removal of any
one-time new budget proposals from the prior year as those do not carry over into the 2027 CSL. Throughout, you'll see references to the city financial policies. Those were adopted in December and we provide them as references if you like to dive in further.
These policies and our work is informed by industry best practices such as the Government Finance Officers Association or GFOA and generally accepted accounting principles. GAP as well as city ordinance and state statute. This slide shows you the road map and
how we developed the CSL. On the far left, our starting point is the 2026 adopted budget. And you can see the three expense components as well as revenue forecasts which are updated and compiled to complete the 2027 CSL. At the start of each banual budget, we do a budget kickoff for departments where we
provide a training about the specifics of the budget process and discuss budget capacity for the next year. To develop the CSL, we're running many processes concurrently as we update personnel allocation models and revenue forecasts. We place a lot of demand on city departments, especially this year
with the implementation of cleargov. So, we're grateful to their partnership through this work. Over the next few slides, we'll be diving into a snapshot of the CSL expense budget for 2027. While this is just one side of the equation, it is prudent to understand the current costs
of the 2026 adopted budget when rolled forward before turning to how to fund those expenses. This slide is focused on the general fund, which is where a majority of our programs are budgeted, is heavily funded by property taxes, and is where strategic decisions are made by
policy makers to get us to an adopted budget in December. It's important to note here that this is the cost of last year's budget today and as has been stated previously, it does not include any new spending. The financials represent a moment in time and work will continue on items such as our health
insurance premiums and other uh inputs that are finalized over this summer. So, I'll jump into personnel with over 4,000 FTEEs budgeted for the city. personnel is a significant portion of the total city operating costs as we're seeing overall an increase of about $36
million in the general fund from personnel. Um, this is a significant portion we're going to dive into a little bit deeper. We work closely with our partners in human resources and departments to complete our annual review of personal expenses in accordance with our financial policies.
We finalized budget FTE counts and salary infringe for each permanent position to develop a position by position roster that drives the budget amount for the following year. Looking at positions within the general fund, salary infringe expenses have both increased in the 2027 CSL over what was
included in the 2026 adopted budget. Growth in fringe expenses is outpacing growth in salary expenses with growing healthcare employer costs driven by a rise in the cost of medical care as is well as is budging for costs associated with the state's new paid family medical
leave program. The city has seen really effective management of its self- insurance fund and this is really a reversion to the mean as we join other municipalities who are experiencing high medical care costs. The budget division plans for annual increases in personal costs based on growth assumptions that
we revisit annually. The 2027 CSL general fund budget for salaries and wages and fringe is higher than planned which can be attributed in addition to the rising medical care costs to administrative additions of positions and reclassification of positions that while are budget neutral across the budget, they do increase the personal
expense category as well as other job studies and non-personal transfers to the personal budget. Additionally, we are more accurately calculating and budging for personal expenses as implementing our new budgeting software has allowed us to correct for known limitations in our previous system. You
may note because this slide shows two years of historical actuals alongside the budget amounts, there are some differences in the categorization of expenses. We're currently budging all salaries and wages under base compensation. But then as employees take leave, such as sick leave or vacation, those actuals acrew under those
categories. So you'll see leaves and absences higher in the actuals than in the budget. Per financial policies, inflationary growth for agreed upon cost of living adjustments, step increases, and the full cost of fringe benefits is accounted for within department budgets. An exception to this is overtime, which
per financial policy 1.5 is not automatically inflated year-over-year and requires mayor and council approval for departments who need to request any increase to their overtime budget. To better illustrate how budget positions are adjusted as part of the CSL, we have
a simple scenario to walk through. In this example, a position that is budgeted at a salary of 120,000 with 48,000 infringe benefits for a total compensation of 168,000 in 2026 could experience the following adjustments within the current service level. The
position is covered by a collective bargaining agreement that receives a 3% cost of living adjustment in 2027. The current incumbent employee will move from step two to step three in the wage schedule. These two adjustments lead to an $8,400 or 7% increase in salaries
from 2026 to 2027. Fringe benefits driven by salary increases such as FICA, Medicare, PAR, long-term disability, sick leave, severance, and paid family medical leave grow proportionately with the increase to their salary. Health insurance premiums in this example are projected
to increase 5% and dental insurance premiums are projected to increase 3%. And the rate of PFML is projected to increase.1% leading to a second increase in the budget for PFML. These fringe adjustments lead to a 1,845
or 3.8% increase in fringe from 2026 to 2027. So overall, the increase in annual growth in personnel is $10,245 or 6.1%. Applying these increases across all 4,000 positions at the city is the main
cause of increased personnel year-over-year. As a reminder, this is just a simplified example. Many factors influence these adjustments. For example, if the health insurance premium is projected to increase 10%. Instead of 5%, that will double the premium increase for this position to
2330 and raise the total fringe growth to 6.2% year-over-year. Changes at the individual employee level can also have an impact. such as an employee who celebrated a life event that moves them from individual to family coverage can result in an increase of over $16,000 in
the budget health insurance cost for that specific position leading to an upwards of a 35% increase year-over-year. Other changes may lower the budget amount for the following year, such as when a tenured employee at the top step of their wage schedule separates from the city and a new
employee starts at a lower step in the wage schedule. So, it's all to note that while there is predictability to the annual changes in personal expenses, they're highly variable and change frequently at the individual position level. Financial policies guide our team to budgeting for these increases to ensure departments have sufficient
resources to cover known personnel expenses in the following year. >> President Brandon, >> excuse me. Uh uh Mr. Carlson, could you please pause for a question from Commissioner Olsen? >> Yeah. Um so, and maybe this is coming
up. Apologies if it is. So, of those 4,000 employees, do you know about what percentage are under a collective bargaining agreement? Is it all? Is it half? Is it >> Sure. I don't know the uh through the president. Um Commissioner Olsen, I
don't know the percentage. Um the majority of our employees are represented by labor agreements. There are also appointed positions, politically appointed positions, and some non-represent positions at the city. I don't know what that percent breakdown is. >> Okay. Do you happen to know off the top of your head, you know, if
there has been ever a time in this city where there's been kind of across the level obviously not within um you know, agreed upon um contracts uh you know bargain uh collective bargaining agreements where salaries have been held
at like a 0% increase. Do you know has that happened in the history of the city? President Brandt, Commissioner Olsen. Um I'm not going to state a year where that has happened. I don't know if any of the other commissioners are aware of a time when it was 0%. Since I've been with the
city, um our human uh resources, labor relations division handles all of the agreements with individual uh bargaining units and those uh other employees covered by other agreements. Um I don't know when it or if it's been zero. That's something that they're looking at
the labor market and what other public service entities are experiencing as far as inflationary pressure on wage growth. >> Okay. Thanks. >> Uh Mr. Carlson, I'm informed by Commissioner Chugai that um it's roughly 90% of the positions in answer to
Commissioner Olsson's question um are unionized or union represented. And um sort of related question to your last um your last calculation. Do you have a rough idea of the proportion of uh city employees that are
let's say at the top of their wage step versus still moving up the steps? >> Sure. President Brandt, again, not off the top of my head. I don't know what the percentage is, but we certainly can provide that. >> All right. Thank you. Go ahead. >> Great questions. So continuing since
2023, the total budget FTE count has grown for the city by 270 positions across all funds and 166 positions within our general fund. As we look at the change in FTEEs from the 2026 adopted budget to the 2027 CSL, we see
an increase of 18.77 FTEEs within the general fund. This table shows these changes by departments for those that have planned changes in general fund FTE counts from the 2026 adopted budget and administrative FTE changes made this year. For example, two positions in the
3 in1 service center are planned to start in 2027 with the opening of the South Minneapolis Community Safety Center. These positions were included in the 5-year financial direction of the 2026 adopted budget and are reflected in the 2027 CSL. Administrative FTE ads that
were approved this year by the city council are reflected such as the arts and cultural affairs increase of one position that was presented to the budget committee in the quarter 1 update on administrative ads. That increase in personnel was offset by a decrease in the department's non-personnel budget,
making it budget neutral. Additional administrative FD ads that reflect in this table will be presented to the budget committee in our quarter 2 update. There also planned funding shifts for positions that are moving onto the general fund. For example, as the federal safer grant funding ends
after Q1 of this year, those positions have now fully moved into the general fund. So in 2026, there were 15 positions that had 25% of their time budget to a grant. Starting in 2027, they're fully on the general fund. So
that results in a 3.75 FD increase to the general fund from 2026 to 2027. >> Excuse me once again, Mr. Carlson, Commissioner Bernstein has a question. >> Could you just say what were those positions again that were rolled over from grant to general fund? >> Yeah, in Yes. Uh, Vice President
Bernstein, the specific positions were funded by a safer grant, a federal grant that covered a portion of the firefighter FTEES and 25% of their time in 2026 was coded to that grant. That grant ended after
quarter 1. So then there was a plan for the grant agreement to for those positions to continue onto the general fund. As we look at change in FTE count year-over-year from 2026 to 2027, it looks like an increase to our general fund FTE count because that grant has
expired and they'll be fully on the general fund that was planned for in our 5-year financial direction. >> And you said was how many? >> 15 positions. >> 15 and they were all on fire. >> All on fire in that example. Yep. >> Thank Oh, okay. But there's others. Okay. Thank you. >> Certainly.
So these changes to budget positions lead to that increase in the general fund personal expense budget for 2027. I'll now turn to internal service charges. Internal service departments are those that provide goods and services to other departments within the enterprise on a cost recovery basis. The
primary purpose of internal service funds is to enhance the efficiency and effectiveness of city services by centralizing shared resources across departments. This is an approach that's generally considered a best practice and we use it for our property services, IT,
fleet, and general liability expenses. They're the ones that are mentioned here specifically because they use allocation models to distribute their costs to departments. We ask the departments who provide these services to generate an expense budget that maintains current service levels. This process begins in January. We then
review those expense proposals alongside the controller and the CFO and decide what is a current service level that is appropriate to fund for the following year. This is the same process we followed last year and there were no changes to this budget methodology. Those budgets are then allocated out to departments according to each internal
service department's allocation model. These cost models are determined using considerations like department FTE count, historical actuals, identified department specific projects and needs and for general liability and actual report that we receive annually helps
inform the numbers for that expense group. These charges are about 14% of the total operating expense budget. The charges have increased across all funds by 16.8 million and 9.2 2 million within the general fund in the 2027 CSL
compared to the 2026 adopted budget. Increases are primarily driven by inflationary pressures to service delivery and supplies, growth in the total square footage of facilities managed by property services, and higher general liability projections to account for the financial risk of future claims.
This is a visual of the four allocation model charges within the general fund. As we look at year-over-year changes, it's also important to note that changes in personnel costs feed into the growth of internal service charges. As we add positions, we probably need to add workspace, technology, perhaps a
vehicle. Another example is when buildings come online, there are increased needs for custodial and security services. General fund departments are provided the budget to pay for their internal service charges each year per financial policy 1.5.6. So there's no impact on their
operations, although there is that real impact to expenditure growth within the general fund. That wraps up my portion on expenses. I'll now hand it over to Ben to discuss revenues. All right. Thank you, Justin. Uh good afternoon or almost good evening. My
name is Ben Zimmerman and I'm a principal budget and evaluation analyst in the budget division. To this point in the presentation, we have largely focused on the city's current service level expenses. Now, we'll transition to hear about how we're paying for those expenses by looking at our revenue forecasts.
We will first briefly be looking at all funds, then diving a bit more into local option sales taxes and downtown assets and then ultimately the general fund. As has been noted several times previously, we will largely focus on the general fund and some key revenues there because broadly speaking, that is where funds
are the most flexible and most decision-making is made. Revenue forecasts are developed through extensive collaboration with subject matter experts throughout the city. So, I do want to give a quick thank you to the dozens of individuals citywide who have informed this work.
Okay. Before getting into the local option, sales taxes and the general fund, we will first walk through one brief slide on enterprisewide revenues into all funds. As with all the revenue slides we will be presenting today, two revenue categories are omitted, transfers and
use of fund balance. This is because it is more instructive to look at revenues from operations as opposed to revenues from decision points like the use of existing funds or transfers between funds. As was stated earlier, revenue forecasts for enterprise and capital funds as well
as certain special revenue funds like grants in the downtown assets are still under development. When finalized in the coming month or so, the 2027 and 28 revenue forecast will be updated and the inclusion of that data will shift um the visual here higher in those years uh addressing what
currently looks like a contraction. This is just the reality of data availability and timing of the budget process. Now we have a few more slides before getting to the general fund. First we have one slide looking at local option sales taxes or loss revenue which is the
primary revenue into the downtown assets fund. Second we have a slide showing the fund balance outlook for the downtown assets fund. And third we have a slide unpacking the downtown assets transfer to the general fund. I previously stated that no transfers would be included in any of the visuals
here. Um, this transfer is the loan exception because it is increasingly noteworthy as an expense to the downtown assets fund as well as a revenue to the general fund. It is important to grapple with these slides collectively because the health of lost revenues and the health of the downtown assets fund
balance have direct implications on the downtown assets transfer to the general fund. With that, let's first look at this visual of net lost revenues. Generally speaking, it can be easier to talk about gross lost revenues because it makes for more of an applesto apples
comparison year-over-year. This is because in the past 5 years or so, there have been substantive shifts in what has been withheld annually for things like US Bank stadium debt as well as the state department of revenue administrative costs. And with that said, to set the stage for the 2027 lost
revenue outlook, I think it can be useful to pause and briefly talk through the gross lost revenue trajectory since 2020 because this was one of the revenues hardest hit by CO. Uh this period from 2021 to 2025 can be
characterized in three phases. Uh first, in 2020, gross revenues fell off incredibly sharply, contracting about 45% from 92 million to 50 million. In terms of a phase one, that's when we had recovery which was quite rapid and
largely in 2022. Um, and gross loss revenues essentially got back to pre-COVID levels. Phase two recovery was in 23 and 24 when gross revenue growth was still quite strong, averaging about 9% annually. And phase three is where we find ourselves today in a postreovery
leveling out. Our 2025 revenues came in largely flat. And the outlook moving forward is for lower or more moderate growth. to move into 2026. Q1 gross revenues are nearly 2% ahead of 2025 Q1. This might be surprising surprising given Operation
Metro Surge. But what we're seeing in reporting is that while certain sectors like food service were significantly impacted during Q1, sales tax collections in aggregate across all industries actually remained relatively strong. Looking ahead to 2027, we are presenting
today the planned growth of 2.9% from the 2026 adopted budget. As I noted earlier, we are still in the process of developing the finance plans for the downtown assets and therefore the lost forecast. It is good to give ourselves um a little bit more time um to observe
current year performance uh before finalizing our outlook for next year. But tenatively speaking, given what we're currently seeing this year alongside other economic forecast data, uh we don't anticipate a substantive shift uh for 2027 to 2032 in terms of an outlook compared to what was loaded in
the 2026 budget, which is growth in the realm of 2 and a half to 3% annually. Okay. Okay, now that we've talked about the primary revenue to the downtown assets fund, let's move on to take uh take in another slide and look more holistically at the fund balance of the
downtown assets fund. As a note, the convention center, >> excuse me, Mr. Zimmerman, in the slide you were just on >> um showing the five years of lost revenue. >> Um there's a sharp drop from 24 to 25 in
uh sales and use taxes. Does that reflect stadium um shifts or another factor? >> President Brent, good question. This is one I received uh on Monday, but I didn't quite understand in real time. What that actually is reflecting is um
revisiting our journal entries for how we apply the withholding from the state. So, there wasn't a change to the withholding for the the US Bank Stadium or the admin costs. I think it was just reallocating better to the various taxes. So the dip down is not a change
in the outlook per se for that specific revenue. It's just how we're doing the journal entries and doing the withholding and prorating across the respective taxes if that makes sense. No change in outlook just journal entry change. >> I'll leave that to the accountants. Thank you.
>> Okay. Okay. Resuming. Um, so as a note, the convention center, downtown assets, and target center finance plans are still under development. So here again, we're looking at um fund balance outlook from finance plans corresponding with the 2026 adopted budget. Despite this, the
data is still informative. Um, specifically, the six-year outlook projects fund balance dropping from 81 million in 2026 to 48 million in 2031. Again, since the outlook is coinciding with the 2026 adopted budget, um there are no further updates. So, it does not
reflect the current revised budgets for 2026, which are things that would impact this outlook. So, for example, the $7 million transfer for the small business resiliency fund in response to Operation Metro Surge is not reflected. Um and that would essentially shift this entire
line graph down $7 million. Um, but again, this is not yet accounting for any other changes to current year spending or revenues. Um, lastly, I do want to note that we've included the financial policy language relevant to the downtown assets fund balance requirements on this slide as well.
Now that we've talked about um lost revenues and the downtown assets fund balance, let's move on to one final slide on this topic to explain more about the downtown assets transfer to the general fund. Before lost revenue can be considered for transfer to the general fund, it first supports debt
service obligations, operations, maintenance, and reserve requirements of the downtown assets. Again, these downtown assets include the convention center, the target center, withholding for US Bank Stadium debt, PV Plaza, and the Cole Center. Once these costs are accounted for, the general fund transfer
is determined in accordance with the downtown assets fund balance outlook and any fund balance requirements and consideration for eligible spending in the mayor's recommended budget. This transfer determination is a matter of balancing the health of the downtown assets fund balance and eligible uses uh
namely economic development activity in the general fund. for an entirey entirely theoretic example. Um we may identify $100 of eligible uses um but it might not be the case that the full $100 be recommended as a transfer to support it. We need to
infer uh first ensure um that that level of transfer is fiscally prudent given the broader financial outlook for the city. In recent years, the general fund transfer has been amended through the budget process as well as outside the budget process using 2026 as an example.
Um the original original recommended downtown assets transfer to the general fund was 47.4 million. Amendments to the budget in December increased that to 49.8 million. Again that was for additional eligible uses being allocated in the general fund. Um and then more
recently again uh in response to Operation Metro Surge the transfer was further increased to support the small business resiliency fund. And the bottom line takeaway is that moderating lost revenue growth combined with uh diminishing downtown assets means downtown assets to general fund transfer
will likely not be sustainable at the current level. It's been um recommended at with that we can now transition to focus uh more fully on the general fund revenues. And as I noted earlier this visual excludes transfers and use of
fund balance to focus on external revenues. The outlook for 2027 remains slightly positive, the lower growth than prior years. Specifically, we are forecasting 2.4% year-over-year growth from 2026 into 2027.
Per the 5-year financial direction, the general fund levy has that planned growth of 4.8% which was spoken to earlier. And the remaining general fund revenues here aggregated as non-levy revenues are actually forecasted to contract 0.6%.
For clarity, I will note that the levy revenue is included in the taxes revenue category on this slide. That's the blue bar. Um it is a majority of uh that revenue and actually coming up we have a brief slide unpacking that in terms of the non- levy revenue that is everything
else on this slide and the modest forecasted contraction is different than what we've seen in prior years where non- levy revenues were growing closer to 2 to 3%. One notable increasing revenue category is intergovernmental revenues which are forecasted to grow 3.5%.
This is due to increases to a few state aids notably in police and fire. Um but broadly speaking that growth is attributed to increased officer counts in MPD which is a variable uh or a factor driving state aid to police and a new state aid to fire which is meant to
offset PTSD leave. In terms of notable decreasing revenues, uh we have three to flag here today. Interest revenue is forecasted to contract uh nearly 30% or about $5 million. This is largely due to reduced fund balance, but also worsening rates
and yields for our investments. This year-over-year decrease in revenue outlook is far and away the most noteworthy change, driving the aggregate forecast for non- levy to contract into 2027. Franchise fees are forecasted to
contract about 3%. Um, in 2024 and 2025, these revenues came in about $3 million under forecast. The forecast does take into consideration increased revenue from recent rate increases approved by council last fall for implementation in 2026. Uh, but the modest contraction
here is right sizing for under collection the past two years. Non-business license and permit revenues are forecasted to contract just about 2%. Um this is largely a dampening of expectations for revenues related to development activity in the city. Specifically reduced permitting revenue
and plan review revenue in CPED and less fire inspection revenues in reggg services. These uh revenues also underperformed by about three and a half million last year and the current year is off to a sluggish start. Staying within the general fund, we have
two final revenue slides drilling down into the two largest revenue categories. First, taxes and then intergovernmental revenues. First, taxes, which is the largest uh revenue into the general fund. Property taxes or the levy revenue account for the vast majority of this. In 2025, levy
revenue was roughly 54% of general fund revenue and 90% of our general fund tax revenue. Again, the property tax revenue forecast shown here follows the 5-year financial direction as documented in the 2026 adopted budget. And that's that
4.8% general fund levy. One final note that the planned uh levy presented here does again not take into consideration new or reduced spending. Uh again, directly taken from um the 5-year financial direction in the 2026 adopted budget. >> Excuse me, Mr. Zimmerman, if I could uh
stop you for a minute here. Maybe I'm color blind, but I couldn't find the other taxes category in this bar chart, which is I believe green. Is >> it so minuscule that it doesn't show up or >> That's correct. President Brandt, I'm not >> because the sales tax is going into the
downtown assets fund. >> President Brandt, so this is specifically general fund. I can't recall precisely what it is, but I do know that there was a very small amount of revenue, maybe on the order of 10 or 20,000 categorized that way in 2023 or four. And I think that's why it's
appearing on the legend here. >> Thank you. >> Okay. And with that, the final revenue slide. Uh intergovernmental revenues are the second largest revenue category in the general fund and local government aid or LGA accounts for the majority of this revenue category. LGA is roughly
10% of total general fund revenue and roughly 80% of intergovernmental revenues. 2027 LGA is forecasted to hold flat from 2026 and that's essentially um on par or the same level from pre-COVID in 2019.
Total expected LGA for the city in 2027 is 71.7 million. And I will just note that the actual city of Minneapolis LGA certification is forecasted closer to 82 million. But per city ordinance, nearly 12% um is shared with MPB and then a
small portion goes to NBC as well. And with that, I'll send it back to Jay. All right. Before we conclude, we were doing some math in reference to one of your questions earlier about the average steps. So in 2026 filled positions um
average step that we planned for was between steps four and five. Um this is a little bit more complicated because not all positions have the same step schedule. So many have seven steps but not all of them. So um >> if I could clarify my question I was
just asking essentially how many people within the city workforce are at their top step. In other words, would not be eligible for a step increase and only rely on the cost of living. >> Um, President Brandt, I I believe many positions also are eligible for a
longevity increase once they hit that top step. So, that is not the limit of the increases. >> Um, so we've given you quite a lot of information today about the budget process and the trends we've identified from the data. Um we started with that
estimated gap between expenses and revenue and then we explored more deeply why that gap exists even with the planned levy increase of 5.4%. So we took a look at each of the three main expense categories uh the personnel
the internal service charges and that flat base budget and then Ben just took you through the top revenue categories. The general fund is the focus because that is where our city's policy makers spend the most of their time in decision-m. It's the most flexible element of the budget. It has little to
no restrictions on how to use those revenues that are received. And as we've relayed today, despite that flexibility, there are elements of the general fund budget where we have less control. So some non-personnel expenses are impacted by inflation, by tariffs.
personnel costs are are negotiated and subject to state requirements like paid family leave. Um, and so all of these factors are combining to to lead us to this current service level estimate. So understanding where we are now, we're able to enter into the decision-making
portion of the summer. Um, again creating a balanced budget by the end of uh by by mid August. Part of the charge within finance is to always limit the city's risk um and to make sure that we are uh keeping Minneapolis affordable. So, we will look at all possible levers
in our control to maximize revenues and thoughtfully prioritize spending needs. Um and I'll just wrap up acknowledging the timeline that's on the screen here. So, in May, we had departments submit um budget proposals um which we then
transmitted to the mayor's office. Those presentations are ongoing throughout uh throughout the month of June and then we jump into decision making. Um the CSL presentation uh is now will now be concluded after this evening. Um after the mayor's budget release in August,
you'll next see us um for the maximum property tax levy conversation in September. Um and that begins really city council's work um understanding city department budgets and um often with department presentations to the budget committee.
Um throughout we'll have public hearings um as determined by the by the budget chair and then December mid December we'll finalize the budget and hopefully adopt it. So that concludes our uh presentation and we'll be happy to take any other questions.
>> My colleagues have any questions? All right, I'll go ahead. Um, the 5 point or excuse me, 4.8% increase in the property tax that's baked into the U current service level by virtue of the 5-year financial direction brings in
about 17 million. Can one assume that if the budget gap was closed entirely by increased property tax revenues, which I'm sure is not the mayor's intent. I suspect from his speech that he was planning to go through u and examine
program um needs uh that roughly twice the 4.8% would be needed to bring in the 33 which is almost 17 doubled >> um President Brandt. So one one way that
you can get at an estimated levy is to take what's 1% of the total property tax dollar amount. So if you think about 5.7 million or so is about a point on the levy. So for every additional 5.7 you should expect that >> right >> levy to increase.
>> Okay. Thank you. Um, one question. Um, there's been quite a bit of publicity, uh, aimed at the, uh, police overtime issue, and I wondered if that is considered a current service
level for purposes of this budgeting, even though it's an aberration. >> Um, President Bran, that's a good question and one your council colleagues, I think, also had the other day. So overtime is actually spelled out in financial policy. So finance does not
have the authority to increase that budget based on prior year spending. Um we do have to get a proposal from the department and have it be considered in the policymaker decision process. >> Um if I could just un make sure I understood your answer. Uh does that
mean that if the department wants to maintain a sub overtime at substantially the level it has been running recently, they would have to submit and that would be an increase in the U potential 4.8%
property tax or that's in the 5-year financial direction. And Commissioner Bernstein has a question. Thank you. I think similar just to understand the the impact uh of the what we're hearing about this year's overtime spending. So
that would be late we you're estimating 28 to $33 million gap above the 5.4% total levy increase and then the overspending from MPD in 26 would be on top of that. Correct. So that would also
have to be reconciled potentially a transfer from the from a fund or or something else. >> Um President Brandt, Commissioner Bernstein, uh not nec it wouldn't necessarily be an additional 20 million. So what the department uh will probably bring forward is a request for the 27
budget to be increased in 2026. What we're experiencing is the fund balance and other departments picking up the remaining cost. >> Okay, so some balance there. Okay, that's helpful. Thank you. I went back and looked uh comm uh Mr.
Senza at the um at the um 2026 CSL presentation and I I went through it pretty carefully and I could not find any description uh prospectively for 2026 as to the budget
gap other than the term modest gap. Um do you recall what it was? At this point, >> President Brand, it was some millions. Um, it was not near this scale. Um, we did make some administrative adjustments to
uh how we calculated personnel last year, which did bring down that gap quite a bit. Um, the city had been budgeting for vacancies at a much higher rate of pay and we brought that down and so that helped um, alleviate some of the strain in the CSL.
got one more general. >> Uh, Commissioner Bernstein >> on under collections. Um, that came up when we looked uh when the assessor was here. Um, and I hopefully they'll get back to us at some point about that. And then it came up again at the very end about franchise fees. So, I'm wondering
if you're seeing that in a bunch of other places and how big of an impact is that having in addition to what we're seeing for property taxes. >> Sure. Through the chair, Commissioner Bernstein. So property tax under collection we always budget some percentage of that will not be collected. Um it's varied. I think in
the last in the current year budget I think we assumed 98%. We may need to revisit that in future years. Um franchise fees are a little different. So franchise fees are really variable based on market based on weather. So,
um, we have made the city has made good faith attempts to estimate what we might bring in for franchise fees, but, um, we can't guarantee that. And so, that has impacts as we're considering, um, as you all probably know, the the climate legacy budget, which is intended to be
sort of funded by a marginal increase from the franchise fees. So, it's a moving target. We try to get better every year, but um there was an [clears throat] additional increase that council passed in in December that that took effect I think in quarter two. So we don't yet have any data on how that's
performing. >> Can I follow up? >> Sorry, just and then is it a trend you're seeing? I guess is a so that was they understand how it might impact the budget, but are you seeing that in other places? Is it something that's echoing in other parts of the budget? um or does
it seem pretty, you know, like on the same course it's been? >> Um through the chair, Commissioner Bernstein. So, we've gotten much more precise about the revenue budget in the past few years and and a lot of that is is thanks to the process that Ben runs
with city departments. So, we engage all of those subject matter experts across the enterprise. Um I think there's a natural tendency for departments to want to underestimate the revenues they bring in. We try to get people, you know, 50/50. What's a reasonable uh revenue that we can anticipate based
on what you're seeing right now and based on past performance. So, um I would say those are those are much more predictable when we do that exercise. Property taxes, you know, so much is going to be dependent on how's downtown high-rise market doing. >> Got it. Thanks.
I'd >> like to come back to the internal services charges. Um there's a bar chart that gives a total but not that doesn't break down the individual components and how much their increase is uh other than visually. Um and obviously there are
many uh types of liabilities that fall here. Um health insurance is one, worker comp is one, um tort liability is one. Um,
do you have a sense of what's the primary driver here? >> Um, President Brandt, yes. The um, self- insurance liability fund, we do need to budget an increase for that. So, that is
that is part of this. I think we're also seeing, you know, the city is expanding its footprint um, with new buildings and so that means that our property services expenses are going to go up. Excuse me, I meant within the liability. Do you have a sense of which of the components are driving that?
>> Sure, President Van, I would say it's it's uh predominantly the uh liabil the tort liability. >> Thank you. Any other questions? >> I'm so sorry. I have one. >> Oh, Commissioner Bernstein. >> Uh on slide, sorry, this was a specific
one I forgot to ask. On slide 20, revenues, all funds, uh, the yellow bar, rents. I'm curious about who's paying rent to the city. Is it I know that there are internal charges for rent. I'm wondering if it's
that or is that something else like the Target Center, um, Target Field, etc. >> It is distinct from the internal service charges, but I'll see if Ben has a better answer. >> Sorry to bring you back up. >> No, that's okay. through the president. I'll just point out the way the legend
is categorized, the ones near the top, like the rent being third down means it's a very small marginal amount. There's a few different yellows. So, I I would say that it's probably a very very small amount on this bar graph. >> Sorry, that's true in in general fund,
but I'm looking at all funds, I think. >> Sorry, just verifying one more time. Um I can't speak with more detail to that. Um right now I do believe it is quite marginal uh in terms of yeah rents from other entities. Yes,
>> I I know from looking at the city's portal that it's not insubstantial like I believe it's at least 10 million or so >> but I can follow up. That's fine. >> I think we we'd prefer to follow up in writing if that's >> all right. Thank you for your
presentation. I will direct the clerk to receive and file your report. Uh, next up is the uh, consideration of the draft 2026 uh, BET budget which will be presented
by uh, our staff member, executive secretary uh, Christina. And you should have a page here for the budget. Good evening. Good evening, commissioners. President
Brandt, are you ready for me to begin? >> Yes, go ahead. >> All righty. So, today you're going to be reviewing the board of estimate taxation draft 2027 budget um and related tax levy. Um you should have a copy of this form in front of you. The presentation
that I am speaking on today is just to try and help us talk about it and so you can see the numbers on the big screen as I go through it. So we'll start with facts about our reserve funds. At the end of 2025 BET had a little under $340,000 in reserve
funds. Um after you know our liabilities we end up with about 325,000 in the reserve fund at the end of 2025. That's a very very very healthy reserve fund. Um we do have a minuscule budget compared to the rest of the city of course but we have a very healthy
reserve fund over here at BET. In 2026 it's projected that the BET will use 111,000 or so in reserve funds. Um as of this month I can tell you because I run our budget to actuals reports we're going to be we're going to be below that. I think we'll be closer to about a h 100,000 just because we had about
$10,000 set aside in operating funds that we're probably not going to use between travel, tuition, and memberships. We've just been pretty conservative this year with with our spending. So, I think we'll be a little bit under that. Side note, I was going to put it as fund facts, but then thought maybe that
didn't sound as professional, so we went with fund facts. for our drafted 2027 tax levy. Um, our total expenses have increased. The major factor to the increase is fringe benefit costs. Of course, here at the BET, we're not budgeting for things like the tors liability. So, you're going to see
things like that health insurance cost and things. It's going to look like a much bigger impact because that's something that you're going to see in your little microcosm budget of the total city budget. Um, the I am proposing that we use $132,287 in reserve funds. So we consider we
continue to spend that on those reserve funds. I'll talk a little bit more about why in the next slide. There's two different best practices that you can look to. The city financial policy is keeping a minimum of 70 17% of the BET's total budget and reserve funds. If we were to follow this policy,
the BET would need a little under $40,000. Um, GOA, which was referenced in our last presentation, the Government Finance Officers Association, doesn't have a perfect recommendation for a lovey funded board such as ours, but if you were to go with their general fund recommendation to have two months of
operating revenues and expenditures in reserve, that would require about $22,000. So, uh, what that means is basically that the BET's estimated reserve fund balance at the end of 2026 is expected to be well above both of those recommendations.
Sorry, let me go back one. So, for our 2027 outlook, if you look at the um drafted expense and appropriation recommended, I um suggest that we continue to spend down the fund balance and I do not suggest a levy increase for 2027. Again, this is talking
specifically about the board of estimate and taxations budget. However, for our 5-year financial planning, although the fund balance is currently quite high, the net position will continue to quickly decrease based on our current spending levels. That is by design. We want to spin that down a little bit. Our
levy increases at lower levels over multiple year. Sorry, increasing the levy at lower levels over multiple years is of course pre preferential to a sudden increase. So, we're going to look to start gradually doing that. 2026 and 2027 ending net positions will help
better inform exactly what those levies should be. When we close out 2026 and see exactly what our health, you know, for example, our health insurance premiums are expected to be in 2027 and then we close the books on 2027. We'll keep getting more and more accurate with those levies. Um, the amount of the BET
levies in 2028 will I have here likely increase. I can almost certainly guarantee you that at this time next year, I will be asking you to increase the BET's portion of the levy for 2028. Um, just because we're going to, if we continue with this plan, as I propose, we're going to continue spending down
that reserve fund and then it'll be time to increase starting next year for 2028. Um, just as a reminder in case anyone gets concerned because they hear me stand up here and say levy increase, levy, this is just for the BET's budget. Um, and that $102,136
that the BET currently leveies for in 2026 is less than 0.02% of the total property tax levy amount. So, we are a very tiny microcosm of the entire slice of the pie for property taxes.
Are there any questions that I can answer today for you? >> Any questions? >> All right. All right. >> Yep. Commissioner also Yeah. So, the travel expenses, is that for like staff to go to like conferences or
commissioners to go to? Is that the idea? >> Yep. It's both. Um, for this year, we um figured that the two widely elected officials, those be commissioners, Brandt and Bernstein, we had set aside money for them as well as myself to attend the annual GFO conference. In the past, I've been told that sometimes we
go, sometimes we don't. So, we did set aside about $7,000 for that. Um, and then it was just kind of decided between the three of us that all three of us weren't interested this year. So, that'll be $7,000 that goes back into reserve funds. >> Okay. And parking similarly is for both commissioners and and staff to park.
>> Yes, I have it I have it broke out on my internal spreadsheets, but I believe here it is cumulative for both the parking passes, the validations that you guys get during the meetings and then also the park pass. I am sorry the
parking pass I am given as an employee. So that's one line item one line item here. >> Okay. And then personnel salary. So I I I'm sorry I just don't know. So we employ you or so you are employed by the BT. I I I imagine the two elected
commissioners get some small stipen. Who else? Sorry. Are are are do you all salary? You got it perfectly. Who else is it? That's it. That's >> salary. That is it. And this is also aggregated. So this is a little bit different than if you compared it to last year. Um this is the fringe
benefits and then also the salary. So it's my salary, the commissioner's salary, and then also the benefits costs. Um there's a small benefit cost um potentially for the commissioners if they enroll in parah. But the majority of it is me. The reason that became one line uh is because I actually heard from
our friends over in finance that that is best practice just because if you were to in our case, we only have one employee. So, if I were to change my healthcare election benefits, for example, it would be really obvious if I had those broke out. And it's just kind of best practice to aggregate that all together for employee information. I
don't mind if you guys know exactly what I'm spending for my health insurance, but it's a best practice just to aggregate it all together. So, that's why it's on one line. >> Okay. Thank you, >> Commissioner Bernstein. Um, Commissioner Olsson, thank you for reading into the record that Steve and I
are already saving the taxpayer money by not going to these conferences uh this year. Um, I just um sorry, I didn't know that. So, no one else is paid for their participation on the BET like uh just the elected members. So, it's the the
way the bylaws are are written. It's the two widely elected members because everyone else has over a higher amount. I I I would have to look at it specifically. I think it's like um let's say it's $5,000. Everyone else is paid more than that amount. So, therefore, they're not paid through their service
to the BET because they are getting paid through the city a greater amount than that for their other roles. So, that's why they don't get paid through the board of estimate taxation. >> Thank you. All right. Thank you for that presentation. I will ask the clerk to receive and file.
>> Thank you. >> Our next item is the BET uh schedule and meeting time uh which I've put on the agenda as a discussion just because of the reasons I outlined in a memo to you folks uh uh about two weeks ago. Um,
we've had some trouble maintaining a quorum and I just wanted to ask whether given that there's often a conflict between Commissioner Olsson's duties at the park board and his duties as a BET member um whether we want to make any
sort of modification um whether that's shifting days um to accommodate the park board better or whether it's shifting the time of the meeting. I believe Commissioner uh Payne has a regular committee meeting earlier
in the afternoon that that No. Okay. >> Maybe. Yeah. >> Yeah. So, uh one possibility would be to start a half hour earlier. Um uh and uh does anybody have strong feelings
on this? >> Yeah. So, seeing as you know, I'm kind of where some of the conflict is coming from, uh, starting earlier would be hard on on starting earlier than 4 would be difficult for me. Um, just, you know, getting away from work on time. Um, I
think, uh, you other days of the week, um, you know, Mondays would would maybe be the next best day followed by Tuesdays. Um,
but also I think we'll start to see I'll have fewer conflicts and we can start to schedule um, you know, most of them are scheduled not on uh, our regular board meeting days. It's just we have you know the first year of a new board. We are planning our
four-year goals for the board and kind of combined with uh budgets and goals and those initial budget setting goals and uh long-term uh four-year goals have mostly taken place. In fact, I think all
of them have taken place. Um and so maybe later in the year we we might have a couple extra budget ones that come up. Um but I think for the next several months um we'll be pretty much in the clear on Wednesdays. Um so it's just kind of we
were in a bit of a rough period. >> So uh there's no imminent need for us to solve this u given that outlook. Um in terms of the park board perspective, you'll be okay for a while if we want to
be more deliberative. Um, I would like to um also inquire about the possibility of what would be a [snorts] technical amendment to the city charter
which would authorize the vice chair of the U budget committee or the vice president of the council to uh represent their um chairs. And I wondered, we were
sort of thinking of the possibility of asking the council to add that to a technical package that we had expected might be coming from the charter commission. U now that that is not likely to happen, uh Commissioner Payne, do you sense any appetite for moving
this one forward on its own? uh do you think it would uh be likely to get a unanimous vote so that we wouldn't have to go through uh the charter vote process? >> I I would uh m uh Mr. President, I would
never presuppose how my colleagues would vote on anything. Uh but this does feel like a sensible um reform for this body and I don't feel a controversy about it. So, I think it's absolutely worthwhile to have a broader
conversation and I'll probably work with the clerk on both the procedures and trying to um connect with council members around just trying to get a a sense of whether or not this is in indeed non-controversial as a concept or
if you know I I would hate to see us have to go to the ballot for something like this, but I I could see it fitting into a broader package. So, I think it's just hard to say definitively as a single member of the body how the unanimous like vote would turn out. Um,
I would never speculate that way, but this does on its face seem something that would be approachable for that pathway. >> Thank you, Commissioner Payne for your willingness to sound that out. And if you need any assistance with council
members I may know, u well, uh, I'd be glad to assist wherever I can. Uh, is that um okay. So, let's let's put our eggs in that basket for now given that the park board is not likely to pose a conflict
over the next several months. And uh I guess we uh that's a discussion. So, I think there's nothing to receive and file in the way of a report. So, let's move on to receiving projects from the city council. Item nine for which the
board of estimate and taxation will consider approving the issuance of tax exempt geo bonds at a future meeting. Um is there a presentation on that? All right. Uh any questions? Okay. Then I'll
ask the clerk to receive and file. Uh and uh my colleagues have any updates before we adjourn? All right. And we've completed all the business scheduled to come before us today. And so we without objection,
we're adjourned.