Minneapolis mayor blasts council's 'irresponsible' funding decision for homeless shelter
MINNEAPOLIS (FOX 9) - Mayor Jacob Frey is accusing the Minneapolis City Council of making a "completely irresponsible" funding decision after the council approved $1.5 million in funds to support a homeless shelter.
What happened?
Last week, the council approved the funding to support Agate Housing and Services, Inc., a homeless shelter that is in desperate need of repairs.
Under the resolution, the council promised $1.5 million that would be paid out if the shelter was able to raise another $1.5 million in private funding. On Thursday, officials announced that a private donor had come through. At the same time, Mayor Frey returned the resolution without a signature.
At issue now is how the city is going to pay for it.
Explainer
The council originally planned to use contingency funds to pay for the project. However, to use contingency money, the council needs ten votes to advance a resolution.
However, in committee, the resolution only gained nine votes – which was enough to move the legislation forward to a full council vote, but it wouldn't have been enough to pass it.
A motion by Council Member Jason Chavez on Sept. 19 amended the bill to use funds from the Community Planning and Economic Development Department.
The problem
In a letter, Mayor Frey said the "irresponsible" decision by the council was causing downstream impacts, forcing the city to make cuts elsewhere, specifically at North Commons Park.
Frey says council members made incorrect assumptions about how the city would pay for the one-time expense and misinterpreted the city's budget.
"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," wrote Frey. "Your motion targeted the projected surplus and North Commons is that ‘surplus.’ The other alternative, instead of cutting funding to North Commons, would be laying off City staff, which I am sure you’re not proposing."
Frey further criticized the council for making a political decision without consulting city finance staff on the change.
Response
Council members responded to Frey's letter on Thursday by accusing the mayor of taking "retaliatory" action.
They also announced an investigation into "financial discrepancies" between the city's financial reporting and Mayor Frey's claims.
The council also says the city has "ended each of the last six years with an average $21.7 million surplus" and is projected to end the year with a $38.5 million surplus.
"The email Council received from the Administration was extremely troubling. Accurate and regular reporting is mandated by the City’s Financial Policies, the Council relies on this information in order to budget and deliver essential services to our residents." read a provided statement from Council Vice President Aisha Chughtai. "For the Mayor to assert saving shelter beds using unspent funding is a reason to cut services and programming undermines the work of the City’s finance staff who are responsible for our reporting, and causes concern for residents of Minneapolis, who need and deserve transparency in how their tax dollars are being spent."
Context
In a statement sent to FOX 9 by the mayor's office, Minneapolis' Chief Financial Officer Dushani Dye pushed back against the council's claims:
"The council’s action either cuts funding for North Commons or cuts City staff. There is no way around it, and I stand by our City’s accounting practices, which are accurate. Our City’s Finance Department takes pride in the financial reporting and the accuracy of our financial statements. These statements are reviewed by many entities including the Office of the State Auditor each year and we have received multiple awards including 49 consecutive years of excellence in financial reporting.
"A budget surplus is not recognized until books are closed at year end and all revenues and expenses are recognized. Second quarter report is a projection and not final until the end of the year. It is not accurate to say the information presented in the 2nd quarter report is wrong. $38.M surplus being mentioned by the Council is only on the expense side and must be reviewed against projected revenues. Second quarter report shows the revenue shortfall of $36M. A projected surplus cannot be looked at in isolation. Also, budget appropriations in departments that are allocated to other entities will show as a surplus."