About

The mayor’s proposed budget continues investments in the City’s nation-leading affordable housing production, inclusive economic recovery, community safety and reform initiatives, downtown revitalization, and historic climate work 

Budget underscores the mayor’s commitment to City’s workforce and competing in tight labor market while balancing the impact on property tax payers

Today Minneapolis Mayor Jacob Frey delivered his 2025 Budget Address in downtown Minneapolis in front of several Council Members, City leaders, and community partners. The mayor’s proposed budget addresses the increased cost of maintaining current City services while continuing to fund core programs, initiatives, and infrastructure important to Minneapolis residents. 

In prepared remarks, Mayor Frey outlined his budget proposal which features investments for the City’s workforce, funding for the federal consent decree and state settlement agreement, and continued commitments towards the City’s nation-leading affordable housing work, sustainable climate action, downtown revitalization, and inclusive economic development. 

The mayor’s proposed 2025 budget totals $1.88 billion with an 8.1% increase in the tax levy. 

“What we are providing through this budget is a way through. We’re doubling down and investing in programs that work for the long haul, we’re ensuring our resources are used effectively, and we’re making sure our community will see the benefits,” said Mayor Frey. 

“These investments are aligned with the values I’ve had since day one, and a difficult budgetary cycle doesn’t mute the core values guiding our shared work.,” Mayor Frey continued.

“Our planet demands work to reduce carbon output, and in Minneapolis we can take steps to deliver. People need the stability of a home, and in Minneapolis, we can continue leading the nation in providing affordable housing. Our streets need to be safe, and in Minneapolis, we can do both innovative and honest work to make that happen.”

Property tax levy 

Mayor Frey’s budget reflects a commitment to maximizing City resources. Inflation and significantly higher but necessary labor costs have increased the cost of delivering excellent City services. The spending down of American Rescue Plan Act (ARPA) funds and a reduced valuation of office buildings have shifted the impact of those costs to homeowners and renters through increased property taxes.

To address these realities without cutting essential city services, the City has:  

• Reassessed and reduced longstanding General Fund transfers to other funds.
• Increased the transfer into the General Fund from the Downtown Assets Fund to more fully cover the critical economic development work.
• Phased out the Commercial Acquisition Revolving Fund, saving $500,000 on an annual basis.
• Increased use of cash and reallocated existing federal grant funding, still maintaining necessary reserves and contingencies but maximizing the use of funds we already have on hand.
• Leveraged the City’s AAA credit rating to borrow funds at lower interest rates for critical capital projects, saving taxpayer dollars.
• Utilized the City’s debt capacity to expand the capital program and meet obligations for street paving and parks.

Multiple other levies factor into the City's overall property tax levy, including independent boards like the Minneapolis Park and Recreation Board, the Municipal Building Commission, and the Minneapolis Public Housing Authority.

Highlights from Mayor Frey’s proposed budget

Community safety and police reform  

• Contributes $1.3 million toward new hires for the implementation of the consent decree and funds training, compliance, and new data systems 
• Invests $17 million in the new Southside Community Safety Center, including $220,000 to staff the center
• Continues the “Imagine Yourself” police-recruitment campaign in 2025 with a $500,000 investment
• Invests $385,000 to increase the pace of sworn and non-sworn community safety background checks, ensuring new MPD recruits are vetted and on the streets faster 
• Continues $5.9 million to support the Behavioral Crisis Response team, providing funding levels for 24/7 culturally responsive services across the city
• Allocates $1.2 million for a new traffic camera initiative to combat reckless driving and better utilize police resources

Affordable housing 

• Invests $17.9 million in the Affordable Housing Trust Fund, a key City resource for affordable housing production and preservation 
• Sustains $5 million ongoing funding for the Minneapolis Public Housing Authority, helping to rehab existing units and increase public and deeply affordable housing units in our city 
• Provides $1.3 million to Spring Street High Rise in Northeast, solidifying a blueprint to provide exponentially more public housing under HUD’s Faircloth to RAD program 
• Adds $1.5 million toward Minneapolis Homes program, providing homeownership opportunities and assistance in building wealth for residents
• Continues a $2.2 million investment into Stable Homes Stable Schools, which has provided housing or housing assistance to more than 4,800 Minneapolis Public Schools students 
• Provides $1.5 million to stabilize existing affordable rental housing units
• Increases housing stability by providing $100,000 in assistance to low-income homeowners to address housing repair orders, allowing them to stay in their homes
• Invests $1.5 million in homelessness response for more outreach, support, storage space, and health and safety initiatives 

Climate and public health 

• Continues investing $10 million in the Climate Legacy Initiative, including:
• $355,000 for electric vehicle charging infrastructure
• $446,000 in workforce training
• $300,000 in the tree canopy
• $180,000 for a first-in-the-nation biochar facility
• $300,000 in the City’s Net Zero Waste plan, an initiative aimed at getting down to zero waste by 2030
• Continues our commitment to addressing opioid addiction with the use of opioid settlement dollars and local resources
• Retains three staff members for mental health services in school-based clinics

Economic inclusion and recovery 

• Adds $2 million to the Ownership and Opportunity Fund in 2026, helping business owners not just own their businesses, but the underlying real estate as well
• Invests $550,000 to activate Nicollet Mall and revitalize downtown
• Expands the Vibrant Downtown Storefronts and Cultural Districts program with $1.43 million, helping to fill vacant storefront spaces in downtown and Uptown with color, beauty, and creativity from local artists
• Provides $300,000 to the Business Technical Assistance Program, providing small businesses and local entrepreneurs with technical, financial, and marketing support, including a focus on Uptown businesses 
• Invests $300,000 in George Floyd Square for art preservation in 2026 as plans for the future use of the street and the People’s Way come into focus

Good governance 

• Provides $9.5 million to help run elections in 2025 and 2026
• Adds a new Labor Relations position in the Human Resources Department to help the City negotiate effectively and efficiently with labor partners
• Sustains East African cultural media programming, a valuable means of communicating with people in Minneapolis and connecting them to government 
• Provides $385,000 for the development of a Racial Equity Framework, which will be a guiding document for all City staff to embed racial equity principles in day-to-day work

The City of Minneapolis' 'AAA' IDR and GO ratings reflect the city's 'aaa' financial resilience given a 'high midrange' level of budgetary flexibility and Fitch's expectations that general fund reserves will be maintained at or above 10% of spending and transfers out. The ratings also incorporate 'strong' demographic level metrics driven by high levels of educational attainment and a history of relatively low unemployment rates and a 'midrange' long-term liability composite. The ratings also reflect the application of a +1 notch additional analytical factor for economic and institutional strength due to the city's role as a vital component of the Minneapolis-St. Paul-Bloomington metropolitan statistical area (MSA), which contributes 1.4% to U.S. GDP.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

--Sustained declines in financial resilience leading to general fund reserves falling to below 10% of spending and transfers out;

--Marked deterioration of demographic and economic metrics;

--Material increase in long-term liabilities assuming current levels of personal income, governmental revenues and spending.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

--Not applicable given the 'AAA' ratings.

SECURITY

The bonds are general obligations of the city, backed by the city's full faith and credit and unlimited ad valorem taxing power. To pay debt service, the city is obligated to levy a tax without limit as to rate or amount on all taxable property within the city.

Fitch’s Local Government Rating Model

The Local Government Rating Model generates Model Implied Ratings which communicate the issuer's credit quality relative to Fitch's local government rating portfolio (the Model Implied Rating will be the IDR except in certain circumstances explained in the applicable criteria). The Model Implied Rating is expressed via a numerical value calibrated to Fitch's long-term rating scale that ranges from 10.0 or higher ('AAA'), 9.0 ('AA+'), 8.0 ('AA'), and so forth down to 1.0 ('BBB-' and below).

Model Implied Ratings reflect the combination of issuer-specific metrics and assessments to generate a Metric Profile, and a structured framework to account for Additional Analytical Factors not captured in the Metric Profile that can either mitigate or exacerbate credit risks. Additional Analytical Factors are reflected in notching from the Metric Profile and are capped at +/-3 notches.

Ratings Headroom & Positioning

Minneapolis Model Implied Rating: 'AAA' (Numerical Value: 11.27)

-- Metric Profile: 'AAA' (Numerical Value: 10.27)

-- Net Additional Analytical Factor Notching: +1.0

Individual Additional Analytical Notching Factors:

-- Economic and Institutional Strength: +1.0

Minneapolis' Model Implied Rating is 'AAA'. The associated numerical value of 11.27 is at the upper end of the range for its current 'AAA' rating.

Key Rating Drivers

Financial Profile

Financial Resilience - 'aaa'

Minneapolis' financial resilience is driven by the combination of its 'High' revenue control assessment and 'Midrange' expenditure control assessment, culminating in a 'High Midrange' budgetary flexibility assessment.

-- Revenue control assessment: High

-- Expenditure control assessment: Midrange

-- Budgetary flexibility assessment: High Midrange

-- Minimum fund balance for current financial resilience assessment: >=10.0%

-- Current year fund balance to expenditure ratio: 30.9% (2022)

-- Five-year low fund balance to expenditure ratio: 20.7% (2022)

Revenue Volatility - 'Strongest'

Minneapolis' weakest historic three-year revenue performance is neutral to the Model Implied Rating.

The revenue volatility metric is an estimate of potential revenue volatility based on the issuer's historical experience relative to the median for the Fitch-rated local government portfolio. The metric helps to differentiate issuers by the scale of revenue loss that would have to be addressed through revenue raising, cost controls or utilization of reserves through economic cycles.

-- Lowest three-year revenue performance (based on revenues dating back to 2005): 3.0% increase for the three-year period ending fiscal 2015

-- Median issuer decline: -4.7% (2022)

Demographic and Economic Strength

Population Trend - 'Midrange'

Based on the median of 10-year annual percentage change in population, Minneapolis' population trend is assessed as 'Midrange'.

Population trend: 1.0% Analyst Input (53rd percentile) (vs. 1.0% 2021 median of 10-year annual percentage change in population)

Unemployment, Educational Attainment and MHI Level - 'Strong'

The overall strength of Minneapolis' demographic and economic level indicators (unemployment rate, educational attainment, median household income [MHI]) in 2022 are assessed as 'Strong' on a composite basis, performing at the 74th percentile of Fitch's local government rating portfolio. This is due to very high education attainment levels and very low unemployment rate offsetting midrange median-issuer indexed adjusted MHI.

-- Unemployment rate as a percentage of national rate: 75.0% Analyst Input (83rd percentile) (vs. 69.4% 2022), relative to the national rate of 3.6%

-- Percent of population with a bachelor's degree or higher: 53.5% Analyst Input (91st percentile) (vs. 52.6% 2021 Actual)

-- MHI as a percent of the portfolio median: 97.9% Analyst Input (47th percentile) (vs. 98.1% 2021 Actual)

Economic Concentration and Population Size - 'Strongest'

Minneapolis' population in 2021 was of sufficient size and the economy was sufficiently diversified to qualify for Fitch's highest overall size/diversification category.

The composite metric acts asymmetrically, with most issuers (above the 15th percentile for each metric) sufficiently diversified to minimize risks associated with small population and economic concentration. Downward effects of the metric on the Metric Profile are most pronounced for the least economically diverse issuers (in the 5th percentile for the metric or lower). The economic concentration percentage shown below is defined as the sum of the absolute deviation of the percentage of personal income by major economic sectors relative to the U.S. distribution.

-- Population size: 422,003 Analyst Input (above the 15th percentile) (vs. 427,806 2021 Actual)

-- Economic concentration: 32.2% Analyst Input (above the 15th percentile) (vs. 32.8% 2022 Actual)

Demographic and Economic Strength Additional Analytical Factors and Notching: +1.0 notch (for Economic and Institutional Strength)

Minneapolis is a vital component of the Minneapolis-St. Paul-Bloomington MSA, the 15th largest MSA in the country in terms of GDP contribution at 1.4% of U.S. GDP as of 2022. The city is home to several large corporation headquarters and is an important contributor to the MSA which had job levels of approximately 2 million in May 2024, according to the Bureau of Labor Statistics.

Analyst Inputs to the Model

The most recently available data was used for demographic and economic metrics.

Long Term Liability Burden

Long-Term Liability Burden - 'Midrange'

Minneapolis' liabilities to governmental revenue remain strong while carrying costs to governmental expenditures and liabilities to personal income remain midrange. The long-term liability composite metric in 2022 is at the 58th percentile, roughly in line with Fitch's local government rating portfolio.

-- Liabilities to personal income: 4.5% Analyst Input (58th percentile) (vs. 4.9% 2022 Actual)

-- Liabilities to governmental revenue: 155.8% Analyst Input (61st percentile) (vs. 168.4% 2022 Actual)

-- Carrying costs to governmental expenditures: 14.0% (2022) (56th percentile)

Direct debt was adjusted with debt issued and amortized since the most recently available audit (2022).

Analyst Inputs to the Model

Analyst inputs reflect new debt issued and debt amortized in fiscal 2023.

PROFILE

Minneapolis is the largest city in the state of Minnesota. Population growth has been strong as educated, younger workers have been attracted to the diverse employment opportunities in the city, as well as to the city's amenities and cultural attractions and easy commutability. Along with its sister city of St. Paul, Minneapolis forms the core for the second-largest economic center in the U.S. Midwest, after Chicago.

The city's broad and diverse economic base benefits from major employers in the stable health care, higher education and state and county government sectors. Minneapolis's economy is very diverse. Major employers include entities in health care, banking, higher education and the retail trade. The city also includes a significant public-sector sector given the proximity of the state government.

The five largest employers in the city are the University of Minnesota (17,691), Allina Health (10,856), Target Corporation (8,500), the Hennepin Health Care (7,111) and Wells Fargo Bank (7,000).

On Friday, Mayor Frey and Council Member Katie Cashman were joined by City leadership to celebrate the City’s 100th electric vehicle going into service. The Minneapolis Public Works Department is driving an ambitious Green Fleets policy geared toward creating a zero-emission fleet. This initiative is just one part of the Climate Equity Plan, which is the City’s plan to reach its accelerated, equitable, and aggressive climate goals over the next ten years. 

“Climate change is an undeniable fact, and it’s on us to urgently address it,” said Mayor Jacob Frey. “Today’s launch of our fleet’s 100th electric vehicle marks a significant milestone on our path to becoming a carbon-neutral city. This initiative—along with our other Climate Legacy Initiative projects—is an investment in our environment, an investment in the health of our residents, an investment in sustainability, and, most importantly, it’s an investment in the future of Minneapolis. We are not just talking about change; we are making it happen.” 

"Minneapolis is nationally recognized for its natural amenities. We’ve made it our mission to protect that reputation and take climate action through our city’s operations," said Margaret Anderson Kelliher, City Operations Officer. "I’m so proud to mark this milestone for our staff and for the residents they serve. By continuing to electrify our fleet, we’re investing in a more durable, sustainable future not just for our planet but our workforce.” 

The City’s commitment to converting its fleet to all electric vehicles will continue to ramp up in the second half of 2024. While 100 electric vehicles are now operating on city streets, 41 additional vehicles have been delivered and are being outfitted for service with 11 more on order. In addition, 49 fleet charging stations have been installed across city operations with another 43 scheduled to be installed this year.  

The City’s new Climate Equity Plan, provides a roadmap for climate work over the next decade, including initiatives like the City’s all-electric fleet. The Plan is funding by the mayor’s Climate Legacy Initiative. Beginning with Mayor Frey’s 2024 budget, $10 million will be invested each year to the CLI, which triples previous climate work investments. The community-wide plan sets a goal to significantly reduce climate pollution by 2030 and become carbon neutral by 2050. It also envisions action to weatherize all homes, reduce utility bills, promote green job training, and plant more trees. 

“As a Council Member, I hear about the need for strong climate action and investments in our resilience and our future. But I also hear from constituents about day-to-day noise pollution, whether it’s from speeding cars on the parkways around the lakes, honking traffic on i-94 or even their neighbors’ leaf blowers in the fall,” said Minneapolis Council Member Katie Cashman, who represents ward seven and is chair of the Climate & Infrastructure committee. “Electrifying our city vehicles is not just about air pollution reduction, it’s also about noise pollution reduction and making our city more pleasant and livable."

Air pollution is linked to increased rates of cancer, heart and lung disease, asthma and allergies. Carbon dioxide pollution, a greenhouse gas, causes climate change. Cars and trucks are the largest contributor of air pollution within Minneapolis and are a significant source of greenhouse gases. 

 “Today, we are a part of one of the many incredible stories going on across this city,” said Patrick Hanlon, Minneapolis Health Department Deputy Commissioner of Sustainability, Healthy Homes and Environment. “We started with a few projects scattered across the city, and we are now investing in hundreds of clean energy projects each year that are saving people money and improving our environmental quality. As environmental and public health professionals, it feels good to work in a city that reinvests in its community in this space.”