For you City budget fans out there, here are some links to the latest Finance Department reports on the state of the City's finances. (These links are correct but, for some reason, may not function directly from your e-mail client. If you have problems, they should work if you cut and paste the URL into your browser). * City of Minneapolis 2000 Mayor Adopted Council Approved Budget; * 2000 Interim Financial Report: Mid-Year Budget Status Report; * 2001 Preliminary Budget and Forecast; and * 2001 ITS Workout Plan. http://www.ci.minneapolis.mn.us/citywork/city-coordinator/finance/services- budget/budget-book-process.html * 1999 Comprehensive Annual Financial Report (CAFR): http://www.ci.minneapolis.mn.us/citywork/city-coordinator/finance/services- budget/cafr.html * 1997 State of the Public Infrastructure report -- Executive Summary and Introduction: http://www.ci.minneapolis.mn.us/citywork/public-works/infrastructure-report -1997.pdf The highlights: 1. Internal service funds have a combined cash deficit of $32M and growing; "The City's internal service funds are not financially sound." 2000 Interim Report p. 9. Please note that this cash deficit information is *directly contrary* to Ms. Becker's speculation that the internal service fund cash deficit "is more like $8-9 million in real dollars . . . ." (Becker post 9/17/00) These funds have nothing to do with a deficit "related to having to disclose the maximum potential liability for all lawsuits against the City" as Ms. Becker claims. An *additional* $32M representing the potential value of such claims is reflected in a separate fund set aside for this purpose. See 1999 CAFR, Statement F-2, page 111 ("Self insurance" column). 2. "Artificially low internal service rates allowed the City to meet other external (General Fund) service priorities without forcing reductions to pay for cars, trucks and computer equipment, for example. Thus, the demand for property tax levy has been understated." 2000 Interim Report, p. 11. 3. One fund deficit (the Equipment fund) is so large that it accrues additional interest charges of almost $1M per year. Total cash deficit is projected to be $45M by year end 2001. "Ultimately, this debt is a financial obligation of the taxpayers of the City of Minneapolis just as much as if it were bonded debt sold to investors." 2000 Interim Report, p. 12. 4. We have a $7M over-obligation of CDBG funds. "Should there be an abrupt decrease, or worse cessation of Federal funds, the over-commitment will surface and will require a bailout from other available funds." 2000 Interim Report, p. 13. 5. The 2001 Budget Forecast identifies balancing the property-tax supported funds of the city as a "Major Challenge" for the 2001 Budget. 2001 Preliminary Budget, p. 3 (Slide 5). The concluding spreadsheet shows the ongoing "order of magnitude" gap between resources and commitments in the $15-25M range, each and every year from here to 2010. Preliminary Budget, p. 30. 6. The ITS (Information Technology Services) Workout plan shows how we propose to work out the problems in one fund, the Intergovernmental Services Fund. Of interest here is a thorough organizational redesign coupled with a long-term financial plan. The basic problem is succinctly stated: "For several years, the City has not set the rates high enough to adequately fund its internal services. Although there were external services [sic] reasons, such as infrastructure and public safety investments, this strategy has created operating shortfalls and a cumulative deficit cash position for the Internal Service Funds, including the Intergovernmental Services Fund." ITS Workout, p. 10. Solving this problem will require the following cash commitments over the next eight years: 2001-- $1.2M; 2002 -- $2.4M; 2003 -- $3.6M; 2004 -- $4.8M; 2005 -- $6M; 2006 -- $7.2M; 2007 -- $8.4M; 2008 -- 9.6M. ITS Workout, p. 14. We will incur over $19M in interest charges to float the bonds needed to achieve this workout. ITS Workout, p.13. 7. Unless resolved, the Internal Service Fund problem "could result in the loss of the Triple-A bond rating and service impact for those who pay taxes, rates and fees to the City of Minneapolis." 2000 Interim Report, p. 1. A final comment on Ms. Becker's post: I have no particular interest in pointing fingers. Responsibility will rest where it will. Nevertheless, we must objectively evaluate past policies, practices and choices to understand where we are and how to move on from here. Whatever the merits of the City's past budget policies, and regardless of whether these policies originated with the Mayor or the Council, the reality is that we have a very large challenge ahead of us. We need to take bold steps to deal with this reality. I am open to anyone's plan which does this, whether it comes from the Mayor, City staff or someone on the Council. The point is to recognize the problem and act. One thing is certain. Sticking our heads back in the sand and humming a few bars of "Don't Worry, Be Happy" will only make things worse. Barret W.S. Lane Fulton Neighborhood City of Minneapolis Council Member, Ward 13 Minority Leader
