How Minneapolis can cut $20 million and still spend more in 2027

The answer lies in what each number is being compared with. Mayor Jacob Frey says reductions helped shrink a projected $60 million-plus gap and avoid a property-tax levy increase above 19%. But compared with Minneapolis’s adopted 2026 budget, the 2027 recommendation still raises total spending about 5.3%, the General Fund about 6.4% and the property-tax levy 11.3%.

Minneapolis’s proposed 2027 budget contains an apparent contradiction: the mayor says the City is cutting programs, contracts and positions, yet the recommendation would spend more money and ask property taxpayers for substantially more.

Both can be true because they use different starting points.

In his Aug. 12 budget address, Mayor Jacob Frey said Minneapolis entered the process with an estimated gap of more than $60 million for 2027. He described that gap as a combination of a roughly $28 million to $33 million shortfall in the City’s current service level (CSL) – roughly what officials expected it would cost to continue existing services under updated costs and assumptions – plus another $20 million to $30 million difference between department base budgets and estimated operating costs. Without changes, he said, the gap could have translated into a property-tax levy increase above 19%.

The administration says eliminating or reducing programs and contracts lowered projected spending by more than $20 million and helped bring the proposed levy increase down to 11.3%.

That is a meaningful reduction from what the City says 2027 would otherwise have cost. It is not, however, a reduction from the budget Minneapolis adopted for 2026.

Compared with the 2026 Adopted Budget, the Mayor’s 2027 recommendation increases total spending across City funds from about $2.170 billion to $2.286 billion – an increase of $115.2 million, or 5.3%. Spending from the General Fund, the City’s main operating fund, rises from about $708.1 million to $753.1 million, a $45.0 million, or 6.4%, increase. The proposed total property-tax levy – the total amount the City seeks to collect through property taxes – is $606 million, up 11.3%.

FTE means full-time equivalent, a measure of staffing capacity. One full-time position equals 1.0 FTE; part-time positions count as fractions. FTE is not the same as employee headcount, the number of sworn police officers or the number of layoffs.

A few terms to know

• General Fund: the City’s main operating fund, used for many everyday government services.
• Property-tax levy: the citywide total the City proposes to collect through property taxes. It is not the same thing as the percentage change on any one property owner’s tax bill.
• Current service level (CSL): the City’s estimate of what it would cost to continue existing services after updating for expected costs and other assumptions. It is one of the higher baselines the administration uses when describing its 2027 cuts.

The earlier 2027 plan was smaller

The City’s own previous financial plan shows how much the outlook changed in one budget cycle.

The 2026 Adopted Budget projected a 2027 General Fund of about $716.4 million. The new recommendation is $753.1 million – about $36.7 million, or 5.1%, above that earlier plan. The prior five-year financial direction contemplated a 2027 property-tax levy of roughly $574.2 million and a 5.4% increase. The new levy proposal is $606 million and 11.3%.

That does not mean the City can simply return to its old forecast; costs and revenue assumptions change. It does show that the City’s estimate of what 2027 would require moved substantially.

Where the additional spending goes

The increase is not spread evenly across City government.

Police is one of the clearest growth areas. Fire also rises materially. Public Works shows a large dollar increase, but most of that growth is outside the General Fund. Debt payments, self-insurance and other central costs also contribute to the citywide increase.

Public Works is a good example of why the type of fund matters. Much of its growth is concentrated in enterprise funds, which are used for operations such as utilities that charge for services, and internal-service funds, which pay for services one part of City government provides to another. Growth in those funds raises the City’s all-funds spending total, but it is not the same as a large property-tax-supported expansion of the General Fund.

Public Works’ General Fund changes are comparatively modest, its authorized staffing count declines, and most of its department-level dollar growth is in those enterprise and internal-service funds. The exact 2027 Public Works total differs by $1.5 million between two official City presentations, so the safest conclusion is qualitative: the department’s large increase is mainly a fund-structure story, not a large General Fund staffing expansion.

About those 100 positions

Frey said the City has cut 100 positions. That should not be read as 100 net layoffs or even as a 100-position decline in the City’s total authorized staffing.

The City’s staffing schedule moves from 4,292.13 authorized full-time equivalents, or FTEs, in 2026 to 4,284.94 in 2027 – a net decrease of only 7.19 FTE, or 0.17%.

The two numbers measure different things. The Mayor’s roughly 100 cuts count positions being eliminated. The City’s staffing schedule also counts positions being added, transferred or brought in-house elsewhere, leaving total authorized staffing nearly flat.

Police rises by 22 authorized FTE, Neighborhood Safety by 21 and Fire by 15. Regulatory Services falls by nine; Community Planning and Economic Development falls by seven; the City Clerk falls by seven; Human Resources by six; and several other departments decline.

Neither measure, by itself, tells us how many employees will actually be laid off. Police’s +22 is also a department-wide staffing change, not 22 additional sworn police officers. Minneapolis separately has a charter-based legal duty to fund and employ at least 731 sworn officers, and litigation over whether the City is meeting that requirement remains active.

The cuts look different department by department

Neighborhood Safety shows why a simple “cuts” label can mislead. Its proposed spending falls while authorized staffing rises sharply because the City is changing how some services are delivered. The recommendation cuts about $2.7 million in Violence Interrupter and Violence Prevention Services contracts while adding 23 Community Safety Ambassador positions to bring that work in-house. After other adjustments, the department’s authorized staffing rises from 17 to 38 FTE.

Health offers a more conventional reduction example. The proposal includes about $3.66 million in reductions to contracts and operating services for Climate Legacy Initiatives and Sustainability, along with personnel reductions. Those cuts are partly offset by $1.37 million of one-time opioid-settlement funding. Overall Health spending falls about $5.1 million on the comparable City schedule.

The City Clerk’s roughly 26% decline also requires context. The 2026 Adopted Budget included about $6.2 million of one-time funding for that year’s gubernatorial election. The 2027 recommendation drops much of that election-cycle spending while also reducing six positions and contractual services, then begins a smaller one-time ramp-up for the 2028 presidential election.

Police overtime is also a budgeting story

Police overtime is one of the clearest examples of why a larger budget does not necessarily mean the City expects the underlying activity to grow by the same amount.

The 2027 ClearGov Police page shows a $13.1 million ongoing increase in the Police overtime budget. That is an increase to the budget line, not the final 2027 overtime total.

The history matters. A May 2026 City staff memo reports that the Minneapolis Police Department’s 2025 General Fund overtime budget was $5.906 million while actual overtime wages reached $32.963 million – an overrun of about $27.1 million on that line. Regular salaries, meanwhile, came in about $10.8 million below budget.

The 2026 Adopted Budget made the vacancy-savings mechanism explicit. It eliminated $3.64 million of Critical Staffing Overtime, a higher-rate overtime program used to fill difficult staffing gaps, and said remaining overtime would be paid using savings from vacant sworn positions while regular overtime continued. In his budget address, Frey said the explicit 2026 overtime allocation was $2.3 million and argued that the 2027 adjustment is an attempt to budget closer to the department’s real operating cost instead of relying on vacancy savings.

Chief Brian O’Hara’s March memo makes the mismatch especially concrete. From Jan. 7 through Feb. 8, it estimated about $4.1 million of Police overtime during Operation Metro Surge, before standby pay. In other words, overtime tied to that operation alone had already exceeded the $2.3 million explicit annual allocation Frey later cited – by roughly $1.8 million – little more than a month into the surge. The memo labels those figures as estimates, not final actuals, and they are not a full-year 2026 projection.

That does not make the $13.1 million increase merely an accounting change. It is a real increase in the amount being budgeted. But the records support a more precise interpretation: part of the increase is an effort to put expected overtime costs directly into the budget after recent budgets substantially understated what Police actually spent.

The sequence is revealing: 2025 overtime spending greatly exceeded the budget; the explicit 2026 allocation was overtaken by early-February surge costs; and the 2027 recommendation proposes a much larger ongoing increase to the overtime budget.

The materials reviewed for this analysis do not disclose the resulting 2027 overtime total. We therefore should not assume the new overtime budget is $13.1 million, or claim that the final 2027 amount is definitely above or below the $32.963 million spent in 2025.

Fire rises, with an unresolved federal-grant comparison

Fire’s recommended budget rises about $14.4 million and its authorized staffing rises by 15 FTE.

Frey describes a plan involving 15 floating firefighters supported by SAFER, a federal firefighter staffing grant program. The idea is that those firefighters could move among stations to cover absences and reduce overtime, with potential savings of up to $2 million annually.

But the prior 2026 budget had already contemplated 15 SAFER-funded Fire positions moving to full General Fund support in 2027. The available source trail does not establish whether the 15 positions in the new recommendation are the same group, a successor group or an additional configuration. The safe conclusion is therefore the verified one: Fire is +15 authorized FTE in the recommendation, without calling those positions 15 definitively net-new firefighters beyond the previous 2027 plan.

More taxes and charges, less money from other governments

The spending changes come with a significant shift in where City revenue is expected to come from.

From 2026 Adopted to the 2027 recommendation, the City’s revenue schedule shows taxes rising about $56.2 million, charges for services and sales about $47.7 million, bond activity about $30.8 million and special assessments about $12.6 million. Intergovernmental revenue – money received from other governments – falls about $42.3 million, or 15.9%.

The City’s schedule does not show how much of that decline is federal, state or local, or whether particular grants are expiring, so those causes should not be assigned from that table alone.

For property owners, the headline is simpler: the mayor is proposing a $606 million total property-tax levy, an 11.3% increase, even after the reductions he says helped avoid a much larger increase.

A recommendation, not the final budget

The clearest way to understand Minneapolis’s 2027 proposal is not that the City is simultaneously “cutting” and “not cutting.” It is that different comparisons answer different questions.

Compared with the administration’s estimate of what it would cost to maintain services, the mayor says the recommendation removes more than $20 million. Compared with the City’s adopted 2026 budget, total spending still rises 5.3%. Compared with Minneapolis’s own earlier 2027 financial plan, the new General Fund and property-tax levy are materially larger. And inside the budget, some apparent increases represent new activity while others reflect services moving in-house, the way different City funds are organized, or an attempt to budget recurring costs more explicitly.

The 2027 proposal is still the Mayor’s Recommended Budget, not the final adopted budget. The City Council can change both spending and the levy before adoption.

How this comparison was made

This analysis compares the City of Minneapolis 2026 Adopted Budget with the 2027 portion of the Mayor’s 2027-28 Recommended Budget. For exact citywide spending totals, it uses the City’s official all-funds spending schedule; revenue and staffing comparisons use the corresponding official City schedules. The mayor’s Aug. 12 budget address is used for the administration’s description of the projected gap, cuts and policy rationale. Police overtime history is supplemented with official City staff memoranda dated March 24 and May 19, 2026.

These are budgeted, forward-looking spending amounts. They are different from the audited, government-wide accounting measure used in the separate Minneapolis Civic Ledger, which tracks what the City actually reported spending after the fiscal year closed.

Publication caveats

The analysis preserves unresolved differences in the City’s source materials rather than quietly choosing one version. Among them: an $18.394 million scope difference between certain citywide budget presentations; a $1.5 million difference in the 2027 Public Works total between two City tables; conflicting presentations of cash balances; a disagreement over whether Traffic Safety Cameras are labeled one-time or ongoing; the unresolved relationship between the prior 2027 plan for 15 SAFER-supported Fire positions and the new Fire staffing presentation; and the absence of a published final 2027 Police overtime total in the materials reviewed.

Watch the Mayor’s Budget Address