Budget committee receives mayor’s recommended 2026 budget and hears tax, staffing overview

The Minneapolis City Council Budget Committee received and filed the mayor’s recommended 2026 budget Monday and heard a detailed briefing on the city’s spending and revenue outlook, the proposed 7.8% property tax levy increase and assumptions on vacancies and benefits that reduced the levy from earlier projections.

The presentation, delivered by Jane DeCenza, budget director for Finance and Property Services, and Justin Coles, budget manager, outlined the mayor’s recommended supplemental budget, described the online budget book enhancements and explained a series of adjustments that lowered the levy from earlier projections. "Our goal is a readable document that explains the financial and policy decisions impacting the budget," DeCenza said.

Why it matters: The committee’s review begins the public and council process that must conclude with the council’s final adoption in December and the county certification of the levy by Sept. 30. Committee members asked for further detail on levy drivers, the distribution of property tax dollars and the mechanics of recently adopted staffing and vacancy assumptions.

Total city spending in the recommended 2026 budget rises about 7.41% (roughly $140 million) from the prior year, the presenters said. The increase is driven chiefly by salary and fringe costs (about 24% of the growth) and an expanded capital program (about 64% of the growth). The budget includes the following savings and adjustments highlighted by staff: an administrative change in vacancy budgeting and lower health insurance assumptions (reported savings cited by staff), a $16 million in department-identified general fund savings accepted by the mayor, removal of most departmental food and beverage budgets (about $140,000 saved) and reductions to certain levies (permanent improvements and bond redemption) that together reduced levy pressure.

Justin Coles described how the recommended levy moved during development: an initial planning projection of 10.8% (from the 2025 adoption) evolved into a 13.1% estimate to maintain current services, then to 11.2% after applying the revised vacancy budgeting approach and, finally, the recommended 7.8% levy after additional reductions and policy choices. "This reflects a series of careful and challenging discussions throughout the budget process," Coles said.

The committee heard a breakdown showing how an estimated annual property tax bill for a median Minneapolis home (example given by staff) would total about $2,272 under a 7.8% levy increase, with staff-provided allocations that included $655 to general government, $500 to the police department, $393 to parks and recreation and $271 to capital projects and debt service.

Coles and DeCenza underscored that a seemingly small change to the levy matters: staff showed that reducing the levy by one percentage point in 2026 would require roughly $5.4 million in spending cuts or equivalent non‑property tax revenue, and they warned that such tradeoffs are real and consequential.

Officials also explained the budget book improvements: department pages now include expanded staffing detail (budgeted FTE counts by fund, program and job title), clearer lists of 2026 budget changes and equity and performance context. Staff demonstrated an interactive levy impact estimator, linked in the budget book and on the assessor’s website, that lets residents test levy scenarios by ward and property value.

The committee was reminded of the remaining public schedule: a public hearing on the property tax levy Sept. 10; the Board of Estimate and Taxation vote on the maximum levy Sept. 17; department presentations through October; and multiple public hearings before the council’s planned adoption in December. Chair Aisha Chugtai directed the clerk to receive and file the recommended budget and the committee proceeded to department-level review.

Questions and clarifications at the meeting included the allocation of Local Government Aid (LGA) payments (DeCenza confirmed the city is required by ordinance to allocate a portion of LGA to the Minneapolis Park and Recreation Board) and out‑year levy projection drivers; staff pointed to timing of technology projects and other capital items when explaining a lower projected levy percentage in 2027.

The presentation included references to credit rating commentary (S&P Global) noting that drawing down general fund reserves faster than planned could put the city’s rating at risk, and staff said they relied on Government Finance Officers Association guidance when structuring the budget process.

Clerk action: The committee chair directed the clerk to receive and file the recommended 2026 budget and the budget presentation for follow‑up and departmental reviews.