Budget Committee November 13, 2024   11/13/2024

Good afternoon.

My name is Aisha Chugtai and I'm the chair of the Budget Committee.

I'm going to call to order our adjourned committee meeting for Wednesday, November 13, 2024.

Before we begin this meeting, I want to offer a friendly reminder to all members, staff, and the public that these meetings are broadcast live to enable greater public participation.

These broadcasts include real-time captioning as a further method to increase the accessibility of our proceedings to the community.

Therefore all speakers need to be mindful of the rate of their speech so that our captioners can fully capture and transcribe all comments for the broadcast.

We ask all speakers to moderate the speed and clarity of their comments.

Councilmember Payne.

Present.

Wonsley.

Absent.

Rainville.

Absent.

Ellison.

Absent.

I will also remind my colleagues that we're using speaker management today so please make sure you sign in.

colleagues, we have three items remaining on our agenda today, which are items we were unable to get to at our regular meeting yesterday.

First, item number one is a presentation from the Minnesota Department of Revenue on property tax relief programs.

We have two speakers with us to present, Safiya Farah, Somali outreach coordinator, and Mico Yang,

Good afternoon.

First, I want to make a disclaimer.

The information in this presentation is based on the laws in effect when it was written.

It does not supersede or alter any provisions of Minnesota laws, administrative rules, court cases, or revenue notices, and it does not provide tax advice.

My name is Sophia Farah and I am the Somali Outreach Coordinator for the VITA which is the Volunteer Income Tax Assistance Program and also the TCE program which is Tax Counseling for the Elderly for the Minnesota Department of Revenue.

I support all the free preparation sites in the central area of Minnesota.

and also the metro area.

So today's topic is the following that we'll be discussing today.

We will be discussing the renter's credit, homestead, special refund, senior property tax deferral program, market value exclusion for veterans with a disability and also other helpful resources.

So there are big changes for the upcoming 2025 filing tax season.

The major change this year for renters is that the renter's property tax refund

is moving beginning in January 2025.

You will be able to claim the renter's credit on Form M1 instead of filing for Form M1 PR.

So even if you are not required to file a Form M1 based on your income earned, you must file to get the renter's credit.

This basically means that the credit will affect the refund for balance due on the Minnesota's individual income tax return just like all other credits and you will not receive a renter's property tax refund later in the year like you have been accustomed to.

So since this credit will now be on the Minnesota Individual Income Tax Return, we will use adjusted gross income, not household income, which historically included certain non-taxable income to determine the rent credit.

However, subtractions still apply for those 65 and older, disabled and for dependent.

So, renter credit reminders.

Renters do need a copy of their certificate of rent paid, also

and you have to file by April 15th.

Taxpayers will also have a longer amount of time to claim their credits because the statute of limitations on income tax return is three and a half years.

Unlike property tax, which is two years, to claim their renter's credit on return previously filed, they will amend their Minnesota tax return and add schedule and one rent.

Qualifications for this is do you have to be a Minnesota resident?

Household income must be less than $75,390.

Live in a building where either property taxes were payable for 2024 or payments in lieu of property taxes were payable in 2024.

To qualify you must also own and live in your home on January 2nd, 2025.

Have your home classified as homestead with your county.

Pay or arrange to pay your property taxes household income for 2024 less than one thousand three hundred I'm sorry one thousand thirty one hundred and thirty nine thousand and three hundred

So your property must be classified as homestead or you must apply for homestead classification before December 31, 2025 with your county assessor's office.

Renters will not be the only ones to see changes on the property tax refund.

Since the renter's property tax refund has moved, only the homestead credit for homeowners will be on the property tax refund, starting with tax year 2024.

We eliminated schedule M1PR, additional income, and you can now list up to three different types of non-taxable income.

Since the special refund worksheet was infrequently used we have removed the calculation from the property tax refund to simply the form and create a new schedule M1PRSR which is M1PR special refund

While a regular property tax refund is based on your income and property tax, a special refund is based on how much your property tax has increased.

The calculation has moved to schedule M1 PRSR.

To qualify, you owned

To qualify, you have to have owned and lived in the same home on January 2nd, 2024 and on January 2nd, 2025.

Your home net property tax increased by more than 12% from 2024 to 2025 and the net property tax increase was at least $100.

Lastly, the increase was not because of improvements you made to the property.

This program, so the Senior Property Tax Deferral Program is for seniors which may allow them to defer a portion of the property taxes they owe.

To qualify, all of these must be true, must be 65 years or older in the year that you apply.

If married, one spouse is 65 or older and the other spouse is at least 62 years old.

Their household income also needs to be less than $96,000 They have owned and lived in a home for the last five years And lastly, their home has been homesteaded for five years

Additional requirements include that it does not have reverse mortgage.

They do not have a reverse mortgage, a life estate, or any state or federal liens on the property.

Other liens against their property are less than 75% of the estimated market value.

So how does this program work?

The property tax will be 3% of taxpayers total household income based on their prior year income.

The state pays the remainder as a loan and when the taxpayer sells their home or involuntarily cancels the deferral, they must repay the loan plus interest.

The interest rate also varies but does not exceed 5%.

We will apply certain taxpayer refunds and payments to their loan.

We encourage you to visit our website and have qualifying residents submit their application online.

The market value exclusion for veterans with a disability program reduces the market of the home for the tax purposes, which may reduce their property tax.

Qualifications are based on whether the taxpayer is a veteran, surviving spouse, or primary family caregiver.

The property must have a homestead qualification and the program is administered by their counties.

There are two exclusion levels, which is $150,000 and $300,000, depending on your status.

For veteran qualifications, veterans may qualify if they are honorably discharged from the United States Armed Forces, have a service-connected disability rating of 70% or higher,

to own and occupy a homesteaded property on December 31st.

For surviving spouse qualification, a surviving spouse of a qualified veteran may be eligible to continue receiving the exclusion if the veteran had 100% permanent and total disability rating.

They may still qualify if the veteran did not receive the exclusion before dying.

Surviving spouse receives dependency and indemnity compensation.

Veteran had a service-connected death while in active service.

If all requirements are met, surviving spouses may qualify for $300,000 of market value exclusion until they remarry.

Transfer or dispose of the property, the spouse can have a one-time sale of the property and still retain the exclusion.

Primary family caregiver qualifications.

They may qualify if they are approved by the US Department of Veteran Affairs, also known as VA, as the primary family caregiver for an honorably discharged veteran with a service-connected disability of 70% or more.

They also would have to own and occupy a homestead property by December 31st.

The veteran that the primary caregiver cares for cannot also own the homestead property by December 31st.

So how to apply?

Veterans must work with their veteran service officer to get their disability rating.

Surviving spouses must apply to continue to receive exclusions and veterans apply to their county assessor's office by December 31st to qualify for taxes payable in the next year.

Qualifying veterans must provide a US government form DD214 or other military discharge papers and their documentation from the VA verifying disability status.

Surviving spouses of veterans who had a hundred percent total and permanent disability must provide documentation describing their benefit as surviving spouses of veterans.

Also surviving spouses awarded dependency and indemnity compensation must provide a verification and dependency and indemnity compensation.

Primary family caregivers also must provide certification.

They qualify for benefits described under the program of comprehensive assistance for family caregivers and information necessary to verify the discharge and disability status of the qualifying veteran.

The veteran that the primary family caregiver cares for cannot also own the Homestead property by December 31st.

Now we will go over helpful resources.

You can visit our website which is

dot state dot MN dot US and you're going to select the individual tabs to find these resources in the top task section.

A link to the MN forms and instructions.

You can see a list of all the free tax preparation sites in Minnesota and also a link to the WMR so that you may pay and check on the status of your returns.

There are two ways a taxpayer can get free tax preparations.

The first option is filing through a software provider.

This is a great option for people who are comfortable filing their own returns.

Another way of getting free tax preparation is through the Free Tax Preparation Sites, also known as VITA.

These programs help prepare federal and state income tax returns.

So who qualifies for VITA?

You would need to be 60 or older.

They are a person with a disability, they speak limited or no English, and their annual income is less than $67,000.

The AARP tax sites do not have income or age restrictions.

We recently launched a new outreach toolkit webpage.

You would just be able to enter promotional materials into the search box.

That way, you're able to see the tax credit, informational videos, printable materials, and newsletters and social media content.

Thank you for

Impact of property taxes on residents in our city is something that lots of council members are paying closer attention to And so we wanted to just get a sense of some of the the programs that are available to those That that meet the qualifications that were outlined are there any questions from committee members related to this presentation and

Absolutely.

Thank you.

And with that I'll ask the clerk to file that report.

So now we will move to item number two on our agenda.

which is several appropriation resolutions related to the American Rescue Plan Act.

For that, I will now invite Jane DeCenza from the Finance and Property Services Department to begin that presentation.

Hi everybody, Jane DeCenza, Budget Director within Finance and Property Services.

Just getting all my papers arranged here.

Okay, so I'm here today to present some technical changes that the finance department is recommending with the goal of closing out ARPA this year in alignment with our plan and also, most importantly, without returning any funds to the federal government.

The agenda today is to revisit some of the information that DeShawnee Dye, our CFO, presented at her July ARPA update presentation.

We will spend a little bit more time talking about the concept of revenue replacement, since that is a key factor in the vote that we're asking you to take today.

And then we'll get into the specifics of the request for council action.

So some context.

The city received just over $271 million through ARPA, which was meant to sustain state and local governments through a period of extreme revenue loss.

We have long planned the spending to occur from March 2021 to December of 2024.

and we held a competitive budget process around these dollars.

So we had a public survey to get community input on what the priorities were.

Department submitted budget proposals much like they do in the standard budget process and then the council considered and amended and approved those ARPA appropriations.

The city landed on five goal areas for ARPA dollars.

So housing and homelessness, economic rebuilding, public safety, climate and public health and of course city capacity and performance.

We also used a large portion of our ARPA award as revenue replacement.

And so what you can see on this screen is the declining amount of revenue replacement that we relied on in our standard budgets from 2022 through 2024.

And you'll notice 2025 is not on that list.

We have long planned for it to end after 2024.

So this strategy was put in place to help us return to our normal level of service before our revenues had recovered.

The image that you see on this screen is from some of our original ARPA budget documents which are still linked on our budget website and it shows the top line which is sort of the normal trajectory of city revenues pre-COVID and then that steep decline when COVID hit and that is that difference there is sort of what revenue replacement is meant to address.

So revenue replacement was sort of a novel concept that Treasury came up with.

They created a formula to help cities calculate what that actual revenue loss was as a result of COVID and those ensuing shutdowns.

And that's what allowed us to classify a large portion of the award as revenue replacement.

And what did that do for us?

It gave us some flexibility and some stability.

We did not have to do wide scale layoffs.

We were able to maintain our level of service to the community.

And we did not have to spend down our fund balance.

There's a link at the bottom here in case you're interested in learning more.

The Brookings Institution has some good resources on revenue replacement in a macro sense.

So since you last heard from finance on this topic in July, we've been doing a lot of work to understand where departments are at on their projects.

So returning to those other five goal areas, what have they been doing with these dollars, what's obligated, and what's actually been spent.

So many of these projects, as you know, have obligated funds.

So they have a contract for their projects.

They have expenses that they've committed to.

And many of those expenses are committed to through the end of December.

So as of November 1, when we did this analysis, the city had spent actual money out the door.

We had spent $245.9 million.

And that brings us to the action for today.

ARPA funds are required to be obligated by the end of 2024.

So they have to be contracted, there has to be an appropriation.

We cannot re-obligate them after the end of 2024.

And so that brings up some risks for the city.

By increasing revenue replacement in the current year, we have an opportunity to mitigate that risk.

to continue spending on the projects that council has deemed appropriate and has appropriated these dollars for and also to avoid sending money back to the feds.

So if we want to talk about the risk a little bit more.

So the city might have funds that are obligated.

There might be a contract in place.

Maybe it's with a small nonprofit.

Let's call $500,000 is on this contract.

By the end of November, they've only spent $250,000.

of that contract.

They insist that they're going to spend the money, they're going to do the work.

But on December 23, they close their doors for good, the work does not get completed, we do not get invoiced.

That's another $250,000 that the city then has to send back to the federal government because it is too late in the year for us to make other choices with those dollars.

And so today's action is really meant to just mitigate against that risk and maintain the legislative intent of the original ARPA appropriation.

So I needed a flow chart for this, so I hope you'll excuse my juvenile graphic design.

But what we are doing today are really the three squares on the screen.

We have $15.74 million in obligated but unspent ARPA dollars as of November 1.

So what we are proposing is we remove those dollars from the ARPA fund budgets.

That's the box in orange.

And then we are increasing the revenue replacement to bring those dollars into the general fund.

So they can't get into the general fund to be eligible for general fund rules unless we bring them in through revenue replacement.

Once those are in revenue replacement, we can then make sure that the departments have the resources that they need to finish out those projects by the end of the year.

And so the action is proposing that we increase department budgets in the general fund to finish out those obligations.

So you'll notice that there's a gap between the two dollar amounts.

So we have $15.74 million, and then we're asking to reappropriate $14.97 million of that back to departments to finish out those obligations.

The remainder,

$780,000 which is just a tiny fraction of the original award will increase the general fund balance

Part of this action also addresses North Commons and I wanted to just proactively tackle that question with all of you and certainly can have more discussion on this.

This slide shows the history of the North Commons ARPA project.

So this is something that was adopted in 2022.

Three million dollars for this Minneapolis Park and Recreation Board project to redo the North Commons Park on the north side.

Those dollars have stayed within finances ARPA budget until this summer.

We had some budget moves that moved the public safety aid and downtown assets around and so part of that legislation was moving the North Commons funding through revenue replacement into the finance and property services general fund budget.

In September, we then had the Agate action, which reduced department budgets, including finance.

So by reducing the finance general fund budget, a portion of the North Commons dollars were impacted.

Today, we would like to solve that problem by re-appropriating the $350,000 back to that project through that revenue replacement remainder.

solving the problem, making sure that they have the full $3 million available for the project, and also being in compliance with ARPA rules.

So where does this happen in the flow chart?

This happens in the $14.97 million, the far right box.

So that is part of increasing those department budgets.

Thank you for that presentation, Director.

Colleagues, are there any questions related to this item?

Thank you, Madam Chair.

Thank you, Director.

Appreciate the presentation.

I just have a couple questions just from going through more of the details, I guess, of the chart.

So a little more in the weeds, I guess, than what was presented here today.

So comparing the ARPA reallocation proposal to the ARPA update we received in July, there are six, it looked like, ARPA projects that had remaining balances in July, but I don't see them listed in the resolution, so I can name them.

So it was the Community Trauma Response

protocols, that was for about $1.2 million, neighborhood traffic calming $48,000, corridor activation $5,000, community food needs $500,000, and then NPRB youth investment $344,000-ish.

So have each of these ARPA-funded projects spent their remaining budgets?

I believe that's the case for most of them we can certainly follow up if you don't mind because I just don't have them all memorized but I know for community trauma response there's some specifics around ARPA

eligibility for public safety type projects.

And so that's one that is spending down through those funds were contracted in the fall.

Okay, yeah so we could just add that to a memo of a follow-up and I can send it in detail to the clerk so it's easier for them to.

So again comparing the ARPA reallocation proposal to the update that we got in July, there were four ARPA funded projects in that proposal that were not listed in the ARPA update.

So there was step up work readiness program, built environment,

Public Works 311S and then enhanced litter services for cultural districts.

I can speak to some of them.

There is an attachment.

We made a different table, which is on the LIMS file, and I can certainly pull it up here if that's helpful.

But I know built environment, for example, is listed on there.

So built environment was a project in neighborhood safety.

There is about $36,000 remaining.

And that one is coming back to the general fund to build the balance.

What were the others?

So the step up Step up is right here Okay, all right, okay, I see that they're okay, okay um

Okay, through the Chair, I would need to follow up on that.

Okay, that's totally fine.

I'll add that to the memo.

Then, when we did receive the ARPA update in July, I made a conservative estimate that the city would have around $7 million in ARPA funding remaining at the end of the year, a moderate estimate of $11 million, and an aggressive estimate of almost $19 million.

During the presentation that you gave, then you estimated that the city would have about $1 million in ARPA funding remaining at the end of the year.

This ARPA reallocation proposal shows as you just stated 15.7.

Through the Chair, Vice Chair Koski, I think

I think I would sort of dispute the characterization.

I think we are much closer to a million dollars remaining because I'm looking at what is unobligated and unspent.

That's attached as an appendix to this presentation.

Through the Chair, Vice Chair Koski, it's a good question.

So I would say that this was done in deep consultation with the project leads and the departments.

And so you'll see some of these dollar amounts are very minor.

So take for example, Black Business Week, there's $58 remaining on their project.

That tells me they did a pretty darn good job spending the appropriation that was given to them.

Similar story with the Community Safety Specialist Pilot Program, $1.59 remaining.

It's just sort of a rounding error.

Some of these have larger balances.

But I think for Heritage Park, the work was complete.

That was just the remainder.

So out of an $875,000 appropriation, they didn't quite need every dollar of that.

And so they're able to return $7,900 to the city as a whole.

So I included in this presentation all the projects that have unspent and unobligated balances that are returning to the general fund.

and is this I mean I know there's 23 of them so okay so you have the rest of these and so there's a similar story to each of these around kind of the reasoning of what happened so using Heritage Park as an example with spend.

Through the Chair, Vice Chair Koski, I think I'd just like to to emphasize that we we tried not to make any policy changes with this action We are really trying to keep this a technical accounting change so that the original intent of the appropriation stands This is really clean up to make sure that the federal government is not getting these dollars that the city can still have them So I think You know to take a look at

public safety training of CSOs.

I think that's a bigger ticket item.

They have about $100,000 that they're not likely to spend, and I think that's just by virtue of how many CSOs did they actually get in the door.

So there's some personal costs are hard to predict in that way.

I think the recruitment, retention, and hiring support was sort of a big category with a lot of things happening.

There was still negotiation happening even this year around some of the retention incentives that were part of the discussion in 2022 and 2023.

I'm okay.

I think just a general update is helpful and I think if any of my other colleagues have specific questions that they can jump in queue to.

And just another couple questions here.

So the ARPA funded projects in this proposal, you know, it has had the funding for the past two to three years.

Just a few questions about those.

What have been the barriers preventing these 34 remaining projects from spending or using the remaining funding?

Through the Chair, Vice Chair Koski, I think that unfortunately is going to depend a little bit on each of these projects.

For projects that have personnel costs, you know, some of the projects have hired temp staff to get through some of these things.

And so those are costs that we would anticipate that they would need.

We want to be able to give them the general fund to carry that work through November and December.

Through the chair Vice Chair Koski, it's it's really funds out the door in the next couple of months is the goal here.

So So if a department if we

If we do not take action, for example, and these dollars go unspent, they don't spend in time, we lose those dollars.

If we take this action and dollars are unspent, say there's, you know, the Lead in Healthy Homes project, say they have $10,000 remaining at the end of December 31.

If we put those dollars in the general fund via revenue replacement, they can still continue to process invoices.

If projects are rollover eligible, that's still a possibility.

Through the chair vice chair Koski I think this is the daily work of finance to be a Support and check on the departments that we work with to be in continuous conversation with them To find out if there's barriers to spending If departments fail to spend dollars that you all have reappropriated into the general fund Then that's that's the end of the story.

Okay, thank you so much.

I appreciate it.

Thank you.

Thank you Chair Chaftey and thank you Director DeCenza.

I really love that you have this cleanup plan in order.

Looks really good to me.

I do have a couple questions.

The first one is, you said that if the money is allocated by the end of the year that it's

for sure securely put, it's allocated to that specific item.

So does that mean the reallocation of the $350,000 from Fort North Commons will be allocated to it and it's securely placed there?

okay yeah that's really good I'm just trying to make sure that we secure it that it's rollover eligible that we give the part I don't think they're planning on collecting it in the next month so I just want to make sure that it's there and that it doesn't

that was in there

Through the Chair, Council Member Vitas, so the items on this slide are the column that says unspent on obligated.

That's all coming back to the general fund.

So they're done.

Okay.

All right.

Thank you so much.

Wonderful.

Thank you.

Thank you, Council Vice President.

Director DeSantis, I have a question about the guaranteed basic income program.

Thank you.

So when we were here

a couple months ago we were told that there was no plan to use the nearly $250,000 of this program again and I met with Director Henson myself twice and was told directly by the director that there was no plan to use this program next year and when I asked you directly about the funding of this program you told me it was too late to reconsider ARPA dollars

The presentation from CFO Dai in the summer was also based on information that we received from the departments.

So you've also talked to the departments.

I've also spoken to the project manager for the GBI program.

So there was a plan that was changed.

Through the Chair, Council Member Chavez, it was not a plan that I changed.

I can't speak to what CPED may have changed.

Okay.

Well, I guess I was miscommunicated three times then.

Colleagues, are there any further questions related to this presentation?

I am not seeing any.

Do you want to continue?

I will move approval of this item all those in favor Please signify by saying aye aye Those opposed say nay Any abstentions?

The ayes have it and that motion carries.

Finally, item number three is a report on models of the participatory budgeting process and for this presentation I will now invite Andrew Hawkins from the Policy and Research Division within the Office of City Auditor.

Thank you and good afternoon.

Chair Chuktai, Vice Chair Koski and members of the committee.

My name is Andrew Hawkins.

I'm with the Policy and Research Division.

And we're going to talk a little bit about participatory budgeting practices and then some process considerations.

Just to get started on the legislative background for this one.

This one came a while back in February of 2024 and was subsequently postponed until today, just due to a number of other items that were moving and some time constraints that we faced there.

Just in the interest of summary, I will note that this year, this is the 17th project that's been delivered by par to the City Council and this will be our final project of the year, so there have been quite a few things that have

have been coming through and out of our office.

Moving into the introduction, again I know we talked about this a little bit from a previous direction at the beginning of this year, but participatory budgeting, it's a democratic process where community members decide how to spend an allocation from a public budget.

The idea is it gives people actual power and input over money and the way that that money is directed.

Like three of the criteria that are generally found in a PB related process are just again a dedicated pool that's identified Sometimes there are strings sometimes there's not like the city can often outline, you know, like the allowable uses but there are examples where

Again, like pots of funding are just allocated to community groups that have pretty broad discretion with how they're spent The engagement strategy is one of the again primary components of this participatory budgeting programs usually one of the underlying reasons that they're being pursued is There's an inclusion aspect to it where you know There's a portion of the population that's been underrepresented either in previous investments by the city or just an involvement in government So the engagement strategy is a critical piece to bring those people into the fold

and lastly the process stages and timelines are made clear.

The transparency piece of this is part of that engagement and just making sure that people understand exactly what to expect from these processes.

A lot of times, I mean, as demonstrated by the work of this committee, government budgets can be complicated.

Timelines can also, you know, like can vary and so I think it's hard for people to keep up.

So a lot of times with this, you know, making it clear up front what people can expect and staying to that timeline is a critical piece.

As far as participatory budgeting goes, there's multiple types.

There's not just one kind of be-all, end-all model that has to be adopted for a budgeting process to fall under PB, the four models that we identified for this presentation.

It's the Porto Alegre model, which was kind of often cited as sort of the first real example of participatory budgeting in the modern era.

That one's self-initiated by residents.

There's a pot that's made available.

and the residents have a lot of discretion over how that's spent.

Proximity participation.

Again, generally, it's a consultative process.

There's no formal ranking or voting.

Again, from a city standpoint, we do some of this now with our actual budget, just going out into the community, talking about what's going to be in the budget and making sure that residents have an idea.

There can be feedback collected, but there isn't a formal process where residents are actually weighing in voting or ranking in a manner that's going to substantively change anything.

Community participation.

This one, it's municipal leaders create the framework.

There's meetings at multiple levels with delegates engaging at the municipal level.

Projects are scoped, voted on, and ranked.

This is often done in a matter of co-governance where the scoping is done on the city side by whoever the responsible authority is that would be carrying out the project.

From a city side, our click process probably falls into the category of community participatory budgeting.

and then lastly multi-stakeholder participation.

So again, this one's a lot like community participatory budgeting, but it often involves additional funding sources.

So this can be where the city contributes a certain amount and neighborhood, again from a city side, it could be a neighborhood organization, seeks out additional partner funding through philanthropy groups, private sector orgs, nonprofits and things of that nature.

So with that one, I think the biggest difference is that it kind of goes beyond just government being involved.

Now, getting into options for consideration.

The first and probably most important stage in this whole process is determining what the project, what the problem is that's trying to be addressed.

So if you're going to go through the effort of creating a participatory budgeting process, what are we trying to solve?

Again, one of the ways that's extremely helpful and that's often done in this process is just

The identification of problem statements, which is we're trying to solve the following problem, here's some data around that issue.

The reason this is helpful is because that's what then allows decision makers to identify what the desired outcomes are.

So if we've identified a problem that we're seeking to remedy, what outcomes would indicate to us that that problem has been addressed successfully by the implementation or use of a participatory budgeting process.

And then lastly just supporting the Design of effective metrics to measure success like once you have those outcomes then it's easier to break them down into you know What specific things can we measure that would indicate these outcomes are being reached?

Next again assessment of current structures or processes so With this one it like with most things.

It's often, you know, the Extremely beneficial to figure out where you're at before starting something new And so this just requires again a city to look at its use of existing resident groups and members So, you know, I think understanding that there's only so much capacity

While you're trying to reach, you know people that might have been underrepresented there's also a lot of structural components to participatory budgeting as far as residential steering committees things like that so Again, especially with respect to the city.

There's a lot of ways for residents to participate.

We have a lot of resident driven bodies through our appointed boards and commissions through our neighborhood groups

So I think for the specific case, you know recognizing if there's any way to fold in those groups to some kind of process It's definitely a worthwhile step because again, you're gonna you know, the more this, you know, I think that Not necessarily watered down, but I think the broader this gets we're by adding more and more and more groups with more and more specifically defined roles It's going to become harder and harder to compete because you're pulling from the same limited pool of resources

Looking at the recruitment and engagement process again to touch on ABC side, you know, like what have we done with the recruitment there?

That's been successful.

What can we learn?

How could that process be you know, like adapted or leveraged if it were to be used in a participatory budgeting?

Environment and the same with the engagement process.

I know NC ours got their equitable engagement process They've worked on there, you know in neighborhoods as well.

So kind of what are we doing right now?

That's been successful and how can we adapt something similar if we were to pursue the PV process?

Looking at the city's engagement mechanisms, so whether this is communications, NCR, budget, what do we currently have that's operating in a similar capacity to this?

And how could that potentially support this process?

looking at project requests and project evaluations.

So again, a key component of participatory budgeting is that residents have the opportunity to submit, and again, I should clarify, in a lot of structures, they have the opportunity to submit ideas.

So, you know, what does that look like and what do we have on our side that's similar, where residents submit things to the city that are then reviewed by any number of staff.

So with that one, it could be anything from

how the city receives public comment to how I know there's resident like complaints or input there's 311 there's a number of entities we have that currently operate in a capacity that's again not necessarily the same but similar in structure and form and then with project evaluation and actually the tracking format and submission I'm going to group those all together because it's the most relevant example for this for reasons I think are probably fairly evident is going to be CLIC

We have our capital long-term improvement committee.

They currently when those projects come forward, there's an evaluation that's done by the respective group That is all made available to the committee Everything's tracked Through the city's website and available for review both what was selected and what was not And again the project submission evaluation.

There is a report that comes back every year

from the Capital Long Range Improvement Committee just saying, kind of, here's what was chosen, here's what wasn't, and the justifications for everything.

So that's again, while not necessarily the same as a true participatory budgeting process, that's definitely the most comparable structure that we have.

Next, we want to look at staffing.

Similar to the previous slide, just identifying any existing capacity.

There are examples where this is done on a percentage basis, where it's X percent of somebody's role.

This is generally

not what's going to come across as best practice or recommended.

There will always be people that have some percentage of this role, but the recommendations from both cities' experiences and the organizations that provide subject matter expertise in this field as one to two dedicated people should be considered as kind of a baseline resource to help drive any process that a city is going to explore.

And then again identification of a home department Just again depending on the scope of eligible projects depending on the funding that's being provided how this is run There's going to be a lot of people involved in any participatory budgeting process But one of the key pieces that just ties back into the transparency is that there's a clear place that it's run from there really isn't a recommendation as far as where that needs to be and

A lot of it depends again on the scope.

There's Seattle runs they had they had one that was run from their version of NCR They also had a standalone program.

That was a one-time effort that was run out of their civil rights department So, you know in some cities we see this in their equivalents of CPED and public works And you know that some it's there's there's budget groups that have been carved out that are responsible for this So really that there isn't necessarily any specific place It seems that it needs to be but what is clear is there needs to be a place

Next just looking at leveraging of third-party vendors So there are not a ton of me at least from the dive into this of Organizations that do provide support on this but there are some it's very common that cities that are looking at this do seek out that additional support Reasons that you'd want to do this would be that assessment of capacity And then I think kind of building on that.

It's the comparison of capacity versus familiarity So well, you might be able to bring in staff.

It's you know, like I

So how much of that actual subject matter expertise are you going to be able to have from the initial jump off point?

Scope and funding considerations.

Again, the more funding, the larger the scope, the more support you're going to need.

If this stays relatively small and manageable, you might not need that much support.

And then just, again, examples for ballpark costs.

These come from the participatory budgeting project.

It was $20,000 to $30,000 for just a role in advising.

Support and designing was $50,000 to $100,000.

Director Hawkins before you begin this slide and continue with your presentation.

I wanted to just note for the viewing public and for staff that are coming in, we are on the final discussion item in the Budget Committee agenda.

We're gonna complete this presentation from Director Hawkins and then complete discussion and then we'll

adjourn this meeting and begin the Committee of the Whole meeting.

I really apologize for the interruption.

Absolutely not.

I appreciate the clarification.

Alright, so on this one, again, identifying the scope of eligible projects.

This is, again, there's no one-size-fits-all, there's no silver bullet.

It really depends on the locality.

So I think figuring out what the opportunities and challenges are specific to Minneapolis is a really important step.

Obviously just acknowledging that a lot of these projects will generally include some degree of capital projects So capital and infrastructure they include and then there's an improvement component that usually involves parks and schools From a Minneapolis standpoint again, the schools are a separate issue.

The parks are a separate issue So that does narrow the scope a little bit

And then the scope versus funding dynamic.

This is one where there's again I'm gonna call it a tipping point and which is something that just again it could really only be found out through I think kind of deliberate engagement with residents and kind of figuring out what they're looking for in this and that's basically again What what scope is too limited to that?

It's not gonna garner enough interest and what funding levels too limited that it's not gonna garner enough interest so there is a kind of a sweet spot that can be reached where

You know the scope becomes big enough the available funds become big enough that you're gonna start to see some engagement from people that you might not have seen otherwise

And then the last one kind of builds on that.

It's project cost capping.

And so this is just determining if there's a limitation.

So once you've identified the scope that's going to be available as part of the program, is there going to be a limitation on how much that project can cost?

And so again, the reason this is done sometimes is just to keep things within a manageable spectrum so that the projects being brought forward aren't too humongous, but also it allows the city to spread the projects around more.

Next we have determining funding amounts and the allocation processed.

So with this one, again, cost calculations.

This is just figuring out, this is all going to be based on your available funds and scope.

There's a variety of ways to do these and we're going to get into some of them, including allocation modeling, but just figuring out, you know, once you have dedicated a certain amount, how do you want to break that down?

So do you want to break it down across?

across wards, across areas of the city, across projects, things like that.

Funding cycles or stages.

This one's back to the pragmatic side of how this is rolled out.

A number of cities, especially those that are just launching this, will do it in cycles or stages.

So that initial stage can often be two years where the first year is planning, the second year is, again, the implementation.

to use Richmond, Virginia as an example.

They're rolling out their pilot right now.

That's intended to be three two-year cycles that sequentially build up the amount of funding that's available.

And then yeah to get to allocation modeling again, these are some of the examples that we did come across the per capita basis There are recommendations from I believe it's very budgeting project.

That was like a good number to start from was $100,000 Sorry for every hundred thousand residents.

It was a million dollars that was allocated to a PB process and

There's also a project on a project basis which that's where you get into the cost caps for the specific types of projects and in the neighborhood allocations Where again X amount of projects per area to use Seattle and of the recent initiative that they had just done with the people's budget

I believe it was there could only be X amount of projects per geographic area in the city with an additional equity component that required a couple additional projects to be in areas that had been identified as being under resourced by capital improvements in previous budgets.

supporting and promoting equitable access.

This is one of the underlying, again, kind of driving forces behind why PB is pursued.

So, you know, like that engagement.

Identification of the stages for input is a critical piece so that you can set people's expectations and understanding for what they're, you know, when they can participate and what's being asked of them at every stage.

that resident committees and volunteers.

So again, just learning from what we've done.

I know this has been at the center of a lot of the city's recruitment for boards and commissions is, you know, how can we ensure that our boards and commissions represent the community they serve?

And so I think taking that and applying it to the strategy to figure out where there's gaps and what we can do is certainly worth pursuing.

Process engagement.

So again, outside of these committees, where are there opportunities for people to engage in the process?

Again, the committees and

The individuals that are being underrepresented are generally, there's certain constraints that they're not going to have the time to serve on a committee or to be a volunteer that's going to play a large role in driving this.

So even just breaking it into the smaller pieces of where can you just engage as a resident of the city in this process might be more manageable for some people.

Accessibility is huge, just minimizing barriers to engagement, making everything available virtually goes an incredibly long way.

Idea submission and voting process fall under this where there's again a virtual and a physical component to it.

A number of cities have had quite a bit of success with just having voting kind of drop boxes around the city.

People can pick up cards at libraries and other grocery stores where they can submit their ideas through the drop box there as well as that virtual submission option.

and I think that again with the voting process one of the really big differences here and I this is probably where you start to get into reaching people that might not have participated or have been participating in the process otherwise was just allocating resources for the equivalent of door knocking and canvassing just to go find the people as opposed to the expectation that we've I think had with so many other things which is you know you come to us we might go to their neighborhood but we're not going to go to their door

Lastly, eligibility.

One of the things that's unique with participatory budgeting is that it's an opportunity to engage residents that may not be eligible for again traditional voting in our elections.

So I think that's where you can bring in a lot of people that would be underrepresented because they're not of age to vote for public office.

All right, we're almost done here for anybody tuning in.

Measuring success and continuous improvement.

There's a ton of data that's available around this and a ton of data that you need in order to figure out what

What's working, what's not, and if you've been successful.

The use of surveys and interviews or focus groups are, again, extremely common and beneficial, especially when they're implemented on an ongoing basis.

And this includes interviews and focus groups with, again, people that are participating, with the city staff that are involved, with your volunteers, with your steering committee.

And so you're getting that feedback from all of these different groups.

And then you know the collecting of participant information It's you have to do it in order to figure out You know if you're reaching the people you want to reach the easiest way to do that is by comparing the participant information to again like historical voting records things of that nature just to see who's coming out for this that maybe hasn't engaged in the past and

However, that can also be a deterrent to a lot of people since any time where we inform you we're collecting your information people can be understandably You know suspicious so just being transparent about what you're collecting why you're collecting it You know how it's stored and how long you'll be keeping it is a key part of that process And then lastly just a continuous review and that's where those interviews and everything come in where this is just at every stage Well, it's fresh in people's mind.

We're continuously, you know getting feedback and assessing what we can improve as we go forward

And then just the conclusion

As I touched on, again, briefly, this is a really complicated structure.

What these look like in certain places can vary quite a bit.

There's a lot of roles that have to be figured out, there's a lot of stages to the process, and there's a lot of structures that get involved.

So it's really important that when this is done, it's again a collaborative design process which brings in both residents to make sure that whatever we're going to pursue or build is something that's desired.

But also that everybody that's going to be involved in this feels like they had a seat at the table Because it'll make it that much easier moving forward Next just that identifying a starting point in current opportunities building something new is extremely laborious and hard So the more we can identify where there might be opportunities to plug in PB related processes to our current operations The more it lowers that initial cost the complexity the unfamiliarity

but also just where there might be areas for improvement.

And then lastly, long range goal setting.

I know often these are things that people want to get going immediately and to some degree you can, depending on the scope and size.

But I think kind of having, acknowledging that there's a really important role to be played through engagement with the community to help in the design of any process.

And so the idea that you might have to start smaller and then as you're learning you continue to build up and scale up over time.

Are there any questions related to?

Thank you Madam Chair.

Mr. Hawkins, it sounds to me like we already do two versions of participatory budgeting, right?

CLIC, which makes recommendations on infrastructure, basically all of our infrastructure to the many tens of millions of dollars, and then the partnership engagement fund with neighborhoods, right?

Also, tens of millions of dollars.

This feels far greater than these other cities that you've mentioned in your report.

Absolutely through the chair committee member Palmesano I think one of the biggest things that's unique for Minneapolis is the neighborhood organization structure We've got 69 I believe at last Last check so that's something that definitely doesn't exist.

I'm at a lot of places at that level They might have something again that would be more similar to award level where there might be 10 to 15 but I think that degree of

specific nature is unique.

With CLIC, there's versions of it that exist in other places where there's a group that just gets to oversee and weigh in.

I think the size and scope of ours is a little bit more unique just in terms of the 33, I believe it's 33 members, but just like there is more representation on that group than I think what you see on a lot of traditional, whether it's committees or structures like that in other cities.

So I do think that there are areas that are, again, if not specifically participatory budgeting, like they're adjacent, where we've got pretty significant infrastructure in the City of Minneapolis.

The only thing I know is that I think the one difference would be how the projects originate.

Yeah, and then if if I may I did misspeak that was a different fund.

I think there's a million dollars in the in the partnership engagement fund Still the feedback that I've heard over time from residents is that while participatory budgeting seems like a good process it really feels

And I wasn't sure if there was any research in that

Through the Chair, Councilmember Palmisano,

It's a fairly recurring theme.

It's unique for the Porto Allegro model.

It's kind of the idea of just, here's a bucket, go nuts.

For lack of a better way to frame it, that's not that common for reasons that, again, since it is taxpayer dollars, you always want to have some degree of stewardship over how it's going to be spent.

If they're going to be committing city resources to something like the city obviously wants some input on you know The role they'll play in that if they have capacity so just going the route of yes like the unrestricted bucket.

I think is fairly scarce at least at this point

For the partnership engagement, that's at $1 million.

Our neighborhood funding for our neighborhood networks is $4 million total.

I believe for the 2025 recommended budget that went through CLIC, it's $278.9 million.

so there are a significant amount of dollars that we at least have some degree of resident participation on and there's certainly an avenue just through I think that engagement because this is complicated there's again 69 neighborhood organizations some of them are merged some aren't and then with you know just the work of CLIC and how you can access or participate in that we're potentially just through engagement and outreach and you know kind of those campaigns you can connect people with opportunities that are already existing

And you know, that's where kind of finding out what residents want is at the core of all of this because it's entirely possible that there's a large group of people that you know, say look this is great.

Thank you.

And I also just want to mention that in fact, when we received the ARPA dollars, we got a lot of accolades for first going out into community and asking what the goals should be with our ARPA dollars.

We didn't just do revenue replacement.

Some of these last things here that you're seeing at the end of the line are very

almost technical things to make sure that we spend every single penny.

But the original ARPA process was fairly unique in our city to the way other cities did it and really looking to make innovative forward progress and I'm pretty proud that we all were able to do that as a city.

We did a little bit of what I would call participatory budgeting with our ARPA dollars even during a hard time.

Quickly to through through the chair councilmember Palmesano's point Another thing that again I think is becoming more common as places have rolled these programs out is having kind of a participatory budgeting

like a compartmentalized like lens that can be used where there's staff that are responsible for operating it and we did see that used with ARPA dollars in some places where you know you have a group that understands how this needs to be rolled out since it's different than a you know typical budgeting process and then participatory budgeting as opposed to kind of a recurring ongoing thing it can be done on a one-off basis as that type of funding you know whether it's ARPA dollars or you know again that can be public events the Seattle example stemmed from

Thank you.

I'm trying to triangulate some of the models that you presented with our current budget reality and obviously every budget process is

is basically constrained by design.

But I'm trying to think about how a truly community-led process would fit into our charter limitations and the thing that I'm thinking about, and I think Councilmember Palmisano was speaking to this a little bit about creating these very constrained sandboxes that the borders of it are very clearly defined within.

Maybe you can play around a little bit.

but I'm interested in just like what does that kind of broader community empowerment look like and I think in the context of the Minneapolis budgeting process there's the council action at the end of the year which to an extent you know as engaged as we are with our communities our amendments should reflect that right and our communities should reflect in our own individual priorities as representatives of our community

but the least constrained part of our budget process is the mayor's recommendation, right?

That's where the biggest constraint is political, you know, what's the property tax levy that our community can bear and for what purpose, for what public purpose is that kind of more open-ended question?

And I was curious if you saw in any of your examples, are they, you know,

is extremely restricted towards that kind of smaller sandbox where it was $100,000 or $1 million and you have some parameters around public purpose, but you can do what you want within that.

Or are there other examples of actually getting to that like top line level of budgeting of saying this is a little bit less constrained, it's more aligned with what the mayor's flexibility is, right?

Because if the mayor wants to make an investment, well, they also have to propose a levy adjustment to make that investment, whereas

When Council gets to it within our process, we are within the sandbox of that top line levy number.

Through the Chair, Council President Payne, I think the answer for that one is twofold.

One of the reasons is I think what you described, part of it is why the sandboxes end up existing.

In the sense of, you know, if this isn't done up front, then we're going to be reacting to stuff on the back end with how much people want, etc.

So just being able to identify a standalone amount that we promise not to touch, you know, you'll get that and then we can run this process within that.

kind of, you know, a bubble that's not going to be impacted by other priorities, I think is why cities have done that approach.

But at the same time, I think there's also been an effort from a number of cities with how that engagement's done.

I think the more you can get that and mitigate on the front end, the easier it is to adjust on the back end.

So from the standpoint of our current situation with our budget,

If everything's allocated before coming forward, then by definition anything that's being received by council that maybe wasn't incorporated into the initial budget is having to pull from something that's already been identified.

So it creates a situation where it's going to be adversarial in nature, just by definition.

So I think that's why there are those carve-outs sometimes is to just make sure that there's something we won't touch But for a holistically the larger budget process.

Yeah, I think that's You know without without that really a clearly carved out identified process on the front end.

So, thank you Wonderful, I'm not seeing any further questions or discussion related to this item.

So I will Ask the clerk to file that report.

Thank you again for that presentation director Hawkins now before I move to adjournment of this meeting and

Since we have COO Anderson Kelleher in the room and we have Director Hansen in the room, item number two on this committee's agenda today was the American Rescue Plan Act reappropriation.

resolutions and one of the questions that came up during discussion was related to the guaranteed basic income pilot and the $250,000 approximately that were

that were reported to Council back in July as being unobligated, unspent, with no plan to get those out the door and then there were a couple of conversations between Councilmember Chavez and Director Hanson that further

Chair Chug Thai, members of the committee, Mayor Hanson, I'm the CPED Director and I believe I pieced it together.

I wasn't here.

I didn't hear the the dialogue between you and Director DeCenza about this allocation and I want to reiterate that I did say that back in July that we had $250,000 unappropriated which was what was reported to us when we put it forward to the council and

It is now the staff has told me or is told the budget office they there are some tail workings at the back end to do some surveys of the GBI participants that was not that was not raised to us at the time that we communicated this to the council back in July I was under the impression that that money was available as I said, it's up to the budget process to do it and

That news about doing because we're doing a an analysis with the Federal Reserve Bank to see what the true impact of GBI was for these families and There's a need and an interest of moving of Surveying those folks to see what that true impact was that was I'm not sure I'd have to talk to the staff

And I can get back to you on more information about that because it's coming to light to me as we are talking or as I was coming into this meeting about what that conversation was with.

So it's a mistake that we made but we want to make sure that we are communicating about the guaranteed basic income because we think this is a

One of the programs that we should be looking at in our equity work around removing disparities and we need like really true data on the impact and so if there are surveys that are needed

to make the case, we might have to make that case to you as well, that we would need that money.

So I apologize for misstating that we had the money, but that's where it is.

Thank you for that

Wonderful.

Thank you very much.

Thank you, Council Vice President Choctaw.

And I just want, for the public record, it wasn't just in council, there's meetings that happened where I was told the same thing.

Wonderful, thank you.

And with that, thank you all for your time today.

We have concluded all business to come before this committee today.