Mayor claims there’s no money to save homeless shelter
Mayor Jacob Frey’s office and city staff threatened cuts to a Northside park, work on non-police alternatives, racial equity audits, and informing employees about benefits enrollments after the city council approved a resolution allocating $1.5 million to keep a homeless shelter operational.
The council voted last month to give $1.5 million to Agate Housing + Services to make needed repairs for things like plumbing at its century-old 137-bed homeless shelter in downtown Minneapolis. This sparked an equal matching donation from an anonymous donor that filled the shelter’s financing gap. Less than a week after the vote, Mayor Jacob Frey’s office said the money doesn’t exist and threatened a series of cuts in response.
For perspective, the city’s 2024 budget is $1.8 billion; the Agate allocation represents .08% of that. Frey’s office and city staff say the council was not looking at the city’s budget holistically, pulling information from a quarterly budget projection.
That budget projection expects the city will end the year with a $38.5 million surplus, but doesn’t take into account an expected $36 million revenue shortfall. Council members noted the city ended each of the last six years with an average $21.7 million surplus, and the city has repeatedly been recognized for strong financial performance.
Frey wrote a letter to the council Sep. 26 saying that unspent funds at the end of the year help reduce property taxes in future years, and the council’s action could increase the tax burden for residents in 2026.
“While the intent is commendable, this funding decision lacked proper vetting and was based on point-in-time budget projections, which is completely irresponsible,” Mayor Jacob Frey wrote to the council. “The $1.5 million you set aside is not free money, it must come from somewhere. Because of this council action, several city departments and services will be affected.”
He said they did not properly vet the proposal among the many subject experts on staff, and their decision did not create a competitive, fair process.
“What will you do when more local organizations and nonprofits need support? Will you simply slash more city services?” Frey wrote. “To protect key investments and vital city resources, my administration will work through the regular budget amendment process to identify a less disruptive source of funding.”
Garnett-Hochuli and Frey listed multiple budget cuts that will happen in response to the council’s decision:
North Commons Park, in Northside’s Willard-Hay neighborhood, will lose $350,000. “Your motion targeted the projected surplus,” Frey wrote in his letter. “North Commons is that ‘surplus.’” He said the other option is to lay off city staff.
“Alternatives to Policy pilots” would lose $30,000. These programs happen under the Performance Management and Innovation department, which seeks alternatives to enforcement—whether that’s police or regulatory—and these pilots could be cut. PMI has led work on non-police alternatives, like behavioral crisis response efforts.
The Assessing Office, which classifies and values properties in the city, would not get “State required Continuing Education” for its staff under the threatened cuts.
If the cuts occur, the city would not tell its employees when benefits enrollment is open next year. Other cuts would hamstring the city’s recruitment efforts by ending its subscriptions to LinkedIn and Indeed and ending participation in job fairs and recruiting events. Updates to the human resources website would also end.
The Racial Equity, Inclusion, and Belonging Department will also reduce its efforts to track racial equity standards
Multiple council members said that the cuts, which were publicized just days after the council’s resolution, are retaliatory.
Ward 5 Councilmember Jeremiah Ellison said the Frey administration didn’t support the other funding options the council explored for Agate’s shelter, so the council took the latest action.
“As somebody who generally feels like we’re all up here operating in good faith, that feels like games to me,” Ellison said of Frey’s cuts at an Oct. 2 meeting. “Now all of a sudden the North Side is affected, and now all of a sudden the sky is falling. That feels like political games to me.”
Ward 11 Councilmember Emily Koski said in an email that Frey’s proposed cut to North Commons Park is an example of the “Washington Monument ploy,” which is a tactic politicians use to avoid budget cuts by emphasizing the potential loss of popular projects.
“The goal is to make the actions seem more harmful than they are by threatening highly visible and valued things,” Koski wrote to the Spokesman-Recorder. “The goal is to trigger public opposition.”
The council voted on Oct. 2 to improve tracking of city funds as a response to Frey. Even Ward 3 Councilmember Michael Rainville, typically a Frey ally, supported that action, agreeing with Ellison that “more information is better.”
But, Rainville noted, “any surplus just goes to the bottom line for next year and helps us reduce the levy, reduce the taxes.”
Multiple council members said during the Oct. 2 meeting that homelessness is an emergency and the funding was necessary to respond to that emergency.
Koski said the city has “a cushion of reserves on top of our cushion of reserves.” She said the city’s financial situation is stable, and “we have the capacity to spend $1.5 million on an emergency without disrupting the budget.”
JD Duggan welcomes reader responses to jduggan@spokesman-recorder.com.