Sorry about the War and Peace posts about the budget.  The budget is the
main policy vehicle for the City and because of that, it is very complex.


I appreciate the debate that Council Member McDonald has brought to the
budget process during her tenure as Council Member.  The debate that has
occurred has made the budget better and I respect her for standing up and
making that happen.

I do need to respond to a couple of the Council Member's points, however.

First, the Mayor didn't come late to the discussion on either the internal
service funds or the infrastructure discussion.  The problems with the
internal service funds had been going on as long as I know of, back at least
to 1988 and basically come from some staff who didn't understand the
intricacies of chargeback systems.  The first time that it really became an
issue at the policy level was in 1994 with a report done by the Budget
Office on the internal service funds.  It was the Mayor's conscious decision
that she couldn't fix every problem at once and instead of correcting this
paper problem, she chose to invest the small amount of money she could free
up in additional cops.  She felt this was something that could be put off
until later budgets as it was not directly affecting service to the citizens
like additional cops.  As you have seen, she has been working on a
workout plan which will gradually fix this problem as funds become

Regarding infrastructure, the issue with infrastructure finds its seeds in
the early 1980's.  The City began building lots of infrastructure, paving
lots of streets and alleys and building sewers and such.  It was selling
lots and lots of bonds to pay for it and its debt was piling up.  In the
mid-1980's, it set a policy that capped the amount of debt it issued as a
percentage of its discretionary income to avoid getting into more debt
trouble.  Then the capital program had to live within these bounds.  It was
what Mr. Lane was speaking about in his post - living within your means.
When we finished the 30 year paving program, it was time to take a long look
at what our needs were and that was the trigger for the renewed discussion
about the adequacy of the capital program.


Regarding the use of TIF.  I'm going to swim a bit upstream here (sometimes
I feel like a salmon on this list).  We have one of the most vibrant
downtowns in the country.  Minneapolis downtown is thriving, with an office
growth rate equal to that of the suburbs, with a thriving night life, with a
booming housing market, with wonderful shopping and cultural opportunities.
I also see a place that pays about 50% of the tax bill in Minneapolis.  When
I travel around the country I see so many cities where the core has rotted
out.  The downtown is dead, with some little areas struggling to live
surrounded by ratty buildings and struggling businesses.   I see the
neighborhoods around those downtowns as slums, full of people with dead eyes
and no jobs.    Most cities in the US would love to have the problems we are
having right now with our downtown.

I think it is pretty easy to Monday morning quarterback and say that
Minneapolis shouldn't have intervened.  I think it is pretty easy to shoot
at any individual deal but I think when you step back and look at the
downtown skyline and see the thriving downtown, it is pretty amazing.  Our
downtown didn't suffer the fate of most downtowns in this country.   And as
you try to figure out why, we did something right here.  It would be a good
debate to try and figure out what.  Part of the answer I think is that we
have a critical mass of things going on.  I look at downtown St Paul where
you could run naked down the street at 5:30 and not be seen by anyone and
see that one critical difference is that they never had that critical mass
to keep development going.  And I think TIF had something to do with it.
The ability to help development along and to direct it in an urban form that
made sense.  And to try to make sure that all that development didn't end up
on the 494 strip or in Eden Prairie.

One aspect of this that I hadn't really thought about until recently was the
impact on our neighborhoods.  I saw a map of where AFDC recipients live and
where entry level jobs are.  (Too bad I can't send graphics through the
list!)  Most AFDC recipients are concentrated in North Minneapolis,
South-Central Minneapolis and St. Paul.  But only 31% of entry level jobs
are in the two downtowns.  The rest are scattered pretty evenly throughout
the suburbs with some  concentration in the 494 corridor.  Only 25% of
Minneapolis and St Paul AFDC recipients have access to cars, the rest
relying on public transit.  About the only place you can get on public
transit for a job from North Minneapolis and from South-Central Minneapolis
is downtown.  Given our pathetic level of transit funding, it is virtually
impossible to efficiently get to even to the inner ring suburbs for a jobs.
Never mind jobs out in the outer rings.  These people have been able to get
to jobs because there have been jobs in downtown to get and they have
transportation to get them to those jobs.  They have been able to get
themselves out of poverty because of these jobs and that benefits everyone.

On the other end of the spectrum, Minneapolis neighborhoods have been very
stable.  We have seen an amazing amount of investment in our neighborhoods,
again, very disproportionate to what other cities have seen.  We have a
strong middle class.  And again, my gut says that is because people wanted
to work near where they lived and that was, in part, because of jobs in the
downtown.  That isn't to say that it was the only factor, but again, I think
jobs available in the downtown helped create a critical mass that helped
keep our neighborhoods stable and keep the middle class when other cities

I am glad that people question the use of TIF.  I agree that looking back, I
probably wouldn't have used TIF as extensively as the City has.  But I have
to marvel at what the City has created.  Our downtown is wonderful.  And I
can also say that, even with the wisdom of hindsight, I can't tell where the
line was - what was necessary to create the vibrant downtown full of jobs
and what wasn't really necessary.  And if I can't with hindsight, I know how
extremely difficult it must be when presented with these deals one by one.

Carol Becker

PS In your post, you said " I would like to point out that Steve and I were
responsible for helping change the CLIC process to a five year plan so folks
had to queue up for funding and also for better financial planning."  The
Minneapolis Charter (Chapter 5, Section 8) requires the Mayor to present a
five year capital budget as part of his
or her annual budget and as such has done since this language was added in

----- Original Message -----
From: McDonald, Lisa M <[EMAIL PROTECTED]>
To: Multiple recipients of list <[EMAIL PROTECTED]>
Sent: Monday, September 18, 2000 3:28 PM
Subject: RE: City Budget -- Response to Council Member Lane

> I've been sitting on the sidelines watching this budget discussion and
> finally have decided to weigh in, hopefully without writing an e-mail
> message the size of "War and Peace."
> First of all it's great to have folks like Barrett and Paul scrutinizing
> budget, since for years it was just myself and former CM Minn.  I would
> to point out that Steve and I were responsible for helping change the CLIC
> process to a five year plan so folks had to queue up for funding and also
> for better financial planning. The other benefit is that we can coordinate
> projects with other entities like the County, so that we use our resources
> in a more efficient manner.
> As to Ms. Becker's post, I want to point out some flaws. Although I have
> utmost respect for her financial acumen I feel there are some problems
> some of the interpretations about the Mayor's intent.
> The Mayor has come to the table about both the internal service fund
> and the infrastructure gap rather late in the game. It is the efforts of
> fiscal moderate caucus, which started six years ago, that has forced these
> issues into the budget discussions. Proof of the pudding is that the Mayor
> has been in charge for twelve years (and in a city office since the early
> 1980's) four as council president, the rest as Mayor. At no time during
> past tenure has she focused on  these long-standing budget issues, until
> made it the centerpiece of every budget discussion for the last six years.
> As to the issue of substantial declines in city revenue. Two things come
> mind. One is that we've know these declines were coming for some period of
> time. To just whine and blame it on the state or the feds certainly
> solve the problem,. We still have to learn to live within our means.
> Several years ago when the downtown economy jumped $8 million in revenue,
> neither the mayor or the majority of the council wanted to spend it on
> paying down the bill for new police cars or the Clinton cops, which some
> us asked for. Instead they wanted to spend on new programs. And the
> priorities process is often about advocating, for new services, often at
> expense of basic services. The Mayor requests every year that basic
> departments, Inspections, licensing, public works cut  their budgets 3-4
> cent. The services provided by these departments are the one's that CM's
> the most calls about. So  cuts result in a decline in basic services.
> Secondly if the Mayor was so concerned about revenue then she wouldn't be
> letting the MCDA create large Tax Increment Finance districts for projects
> like the Target Store and Block E. The districts eat up dollars that would
> have gone into the general fund. For example, inside the Target store
> district, is the U. S. Bank building, the office tower on top of the
> and the Target Headquarters. All of these would have been built whether or
> not the store was built. That means there is $7.7 million less in the
> general fund each year, for the twenty plus years these properties are in
> the district.
> The service redesign in public works, where folks now work 12 months a
> has not only not saved us any money in the past few years but it hasn't
> helped us get any better service, which is what it was supposed to do.
> Every week we hear about another service that Public Works will have to
> There are basically only a couple of ways to be able to have more money in
> the budget. One is more revenue through growing the tax base, two is to
> non-basic services and three is to engage in service redesigns that get
> bang for the buck.
> I would challenge Ms Becker that the actions of previous councils; which
> included our current leadership, (the Mayor, Cherryhomes and Campbell) and
> their inattention to infrastructure and internal service fund problems is
> why we can't put out a real balanced budget. As we all know when we pay
> bills and balance our checkbooks each month, putting off paying a bill
> means we pay more in the long run.
> > -----Original Message-----
> > From: Carol Becker [SMTP:[EMAIL PROTECTED]]
> > Sent: Sunday, September 17, 2000 2:28 PM
> > To: Multiple recipients of list
> > Subject: Re: City Budget -- Response to Council Member Lane
> >
> > I have done a number of governmental budgets and one thing I can say is
> > that
> > they are never balanced with rhetoric.  It is easy to say that you want
> > "world class services" and at the same time say you want to "turn off
> > money tap."  (both quotes from your post)  These are things we all want.
> > There is nothing more telling about a politician then where they
> > dollars and staff.   I personnally believe it is the hardest thing a
> > politician can do.  I challenge you to put out a budget, a real balanced
> > budget that meets the criteria that you have set in this post.
> >
> >

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