Mpls Budget Increases by $140 million

The Bear Bones

Let’s start with a disclaimer: we haven’t spent the dozens of hours it would take to fully dissect Minneapolis’s proposed 2026 budget. At nearly 500 pages, it’s a beast. But one thing is immediately clear: if the City Council approves the plan in December, Minneapolis will spend about $140 million more in 2026 than it did in 2025.

To cover that increase, residents are being asked to pay higher property taxes. The impact isn’t uniform. Our own bill is set to rise by about 10%, while we’ve heard from others facing increases closer to 15%, and some under 5%. The formula behind these variations is opaque, not something the average resident can easily decipher.

What residents can see is this: the city’s total spending is climbing significantly, and households are being asked to fill the gap.

The Research

We had hoped to spend more time digging into the specifics, but several items already stand out:

1. Salary and benefits account for 24% of the total increase—about $34 million.

2. The largest jump in spending comes from Capital Equipment, which covers project design and construction. This category rises by $89 million, moving from $481 million to $570 million. That is a substantial amount of concrete.

The budget notes:

City financial policies provide for limited inflationary increases in non-personnel operating costs; the majority of spending changes between 2025 and 2026 are due to the rising costs of labor and new capital spending.

Another notable area is contractual services, which appear 85 times in the document. Spending here climbs by $13.7 million, from $598 million to $611 million. This is one of many reasons cutting the City Auditor’s office—as proposed—is a mistake. With so much outsourcing to consultants and nonprofits, robust oversight is not optional; it’s essential. In many cases, city employees are paid to manage work contracts that, some argue, the city could perform internally.

At nearly 500 pages, the proposed budget is dense with aspirations, qualifications, and 6-point-font footnotes. The goals and equity statements are admirable, but they can obscure the operational details driving costs upward. For example:
Public Works already employs more than 1,000 people and is requesting 25 additional FTEs. Is that warranted? The budget explains:

Increased FTE count by 25 FTEs through administrative adds, which were offset by capital projects revenues.

Even if revenue increases, the need is unclear.

And then there are the oddities that reveal a consultant’s fingerprints. Take the Project Coordinator role: the city is reducing staffing from 2.3 FTEs to 1.4 FTEs. This fractional accounting is the kind of budgeting sleight-of-hand only someone with an MBA could love.

Recommendations

We know it’s far easier to suggest changes than to carry them out. Still, before the final budget is approved, there are several areas worth a closer look:

1. Re-scope or Defer Capital Programs.
   Capital spending is the single largest driver of the budget increase. With construction costs still elevated, the city should consider prioritizing or delaying certain projects to avoid buying materials and building at peak prices. This review should include identifying duplicated efforts—especially in IT investments—across departments.

2. Control Labor Cost Growth.
   The city can take meaningful steps by closing long-standing vacancies, consolidating roles where it makes sense, and reducing excessive overtime, particularly within Police and Fire. These changes can curb recurring cost growth without undermining essential services.

3. Scrutinize Contractual Services.
   With outsourcing on the rise, the city should reduce dependence on external consultants, combine similar contracts across departments, and renegotiate multi-year agreements—especially in high-cost areas such as IT and property services. A more disciplined approach to contracting can produce significant savings.

Conclusion

Elections can easily pull attention away from the day-to-day work of governing. Speeches, polls, and the constant churn of who’s up and who’s down often crowd out the deeper reporting we need on unglamorous but essential topics—like the city budget.

But nothing focuses attention quite like opening your property tax statement, reviewing your health insurance premiums, or filling a grocery cart for the holidays. When basic household costs are rising across the board, it becomes all the more important to ask why the city plans to spend $140 million more than it did last year. A closer look isn’t just reasonable—it’s responsible.