Community Budget Advisory Committee

In early 2020, it became apparent the City of Bloomington would face a multi-million dollar budget shortfall as a result of COVID-19. In an effort to ensure budget discussions reflected community preferences, the City Council appointed a Community Budget Advisory Committee (CBAC) in May 2020.

In September 2020, the committee asked what services matter most to residents. In October, the committee presented budget reduction recommendations to the community for comment. The Committee made their final presentation to the City Council on November 9, 2020 and concluded with a brief wrap-up meeting following the presentation.

Documents presented to the City Council on November 9, 2020:

Staff presentations to City Council on the 2021 Tax Levy and Budget:

Committee Charter

The Committee Charter describes the charge of the committee and their commitment to the work. The final document was adopted at the June 24, 2020 meeting.

Community listening sessions

Virtual listening sessions were held in September and October 2020 to provide residents and stakeholders the opportunity to share input into the City's budget process and the proposed budget scenarios.

Presentation slides from the September 17 and 19 Community Listening Sessions
Presentation slides from the October 15 and 17 Community Listening Sessions
October 15 and 17 listening session notes
Zoom recording from October 15 listening session

Zoom recording from October 17 listening session

Budget reduction options

In the fall of 2020, the City Council considered three different budget scenarios with various tax levy increases and service reductions developed by the Community Budget Advisory Committee. Below are the initial list of budget reduction options and ranking from the committee.

Meeting agendas and webcasts

Meeting agendas and documents are available at blm.mn/meetings.

Webcasts of the Bloomington Community Budget Advisory Committee Meetings are available on the City's YouTube page.

Meeting topics

April 20, 2020 Presentation - COVID-19 Economic Impact - 2020 Budget Reduction Options
April 27, 2020 Study Session - 2020 Budget & 2021 Budget
June 10, 2020 CBAC-Committee Charter
June 10, 2020 CBAC-Budget 101
June 17, 2020 CBAC-Budget 101 Continued
June 17, 2020 CBAC-Information and Updates
June 24, 2020 CBAC-Information and Updates
June 24, 2020 CBAC-Assessing and Property Values
June 24, 2020 CBAC-Racial Equity Budget Presentation
July 8, 2020 Report to City Council
July 8, 2020 CBAC-Information and Updates
July 8, 2020 CBAC-Community Engagement Overview
July 15, 2020 CBAC-Information and Updates
July 15, 2020 CBAC-Revenue Analysis
July 15, 2020 CBAC-Property Tax Levy-Categories and Impacts
July 22, 2020 CBAC-Information and Updates
July 22, 2020 CBAC-Internal Service Funds
August 05, 2020 CBAC-Information and Updates
August 05, 2020 Fire Department
August 05, 2020 Police Department
August 12, 2020 CBAC-Information and Updates
August 12, 2020 CBAC-Revenues and Preliminary Tax Levy Discussion
August 12, 2020 CBAC-Engagement Plan Status Update
August 19, 2020 CBAC-Information and Updates
August 19, 2020 CBAC-Parks and Recreation Department
August 19, 2020 CBAC-Community Development Department
August 19, 2020 CBAC-Community Services Department
August 26, 2020 CBAC-Information and Updates
August 26, 2020 CBAC-Public Works Department
September 02, 2020 CBAC-Information and Updates
September 02, 2020 CBAC-Legal Dept Background Memo
September 02, 2020 CBAC-Legal Department
September 02, 2020 CBAC-Administration
September 02, 2020 CBAC-Finance Department
September 16, 2020 CBAC-Information and Updates
September 16, 2020 CBAC-Budget Reductions
September 16, 2020 Community and Committee Budget Reduction Ideas
September 16, 2020 CBAC-Finalize Revenue Scenarios
September 23, 2020 CBAC-Engagement Report Presentation Discussion Notes
September 30, 2020 CBAC-Additional Information Parks and Recreation Budget

What has the City done around staffing reductions, pay cuts, or reduced hours? For example, has a 10% salary decrease been considered?

City staff has already cut six full-time positions and two part-time positions from the 2021 budget. The Community Budget Advisory Committee is analyzing additional staffing reductions that would reduce up to 28.5 full and part-time positions.

Given the wide range of positions at the City, there is no “one size fits all” reduction that makes sense. Pay is set at the individual position level – pay for civil engineers moves differently than the pay for administrative assistants, which moves differently than pay for police officers.

Hospitality revenues are not expected to return to their former levels until 2025. The City needs to make decisions now to balance the budget both for the 2021 budget year, but also for future years. Pay cuts are not a permanent solution to the City’s budget.

Other cities who are not as dependent on hospitality revenues are giving cost of living raises next year. Good employees have choices for where they work, and pay cuts will cause good employees to seek better pay elsewhere.

The State’s pay equity law requires cities to have a job evaluation system and a pay structure. The jobs are categorized according to the evaluation and then assigned appropriate compensation.

The City of Bloomington has five labor unions, which require the City to follow significant rules, processes, and laws guiding employee relations and compensation, and severely limits the City’s ability to impose terms and conditions of employment without negotiation.

Cities also are obligated to participate in binding arbitration with unions comprised of essential employees who, as defined by labor relations law, are not allowed to strike. In Bloomington, four of the five unions are essential work groups who have the right to go to binding arbitration. This means that an independent third party decides contested items of negotiation if the parties cannot agree. Arbitrators typically have a three-tiered approach to make their determination:

External market comparisons;
Internal equity among other City employee groups; and
Ability to pay by the employer.

The “market” that arbitrators consider is generally other cities in the metro area of similar size. Information we have from other large, suburban cities indicates that they plan to proceed with cost of living pay increases for their employees in 2021. This is likely due to the fact that their operating budgets are not reliant on lodging and admission taxes the way Bloomington’s budget is and therefore are not experiencing the same challenges.

We have been successful in negotiating a wage freeze for 2021 with one union, and believe the other groups that do not yet have settled contracts will agree to the same. This wage freeze will be extended to non-union employees, as well.

What is the City doing to reduce spending by tightening its belt instead of raising taxes?

In order to address the 2020 budget shortfall due to COVID-19, the City has reduced staff positions, delayed hiring vacant positions, postponed capital projects, reduced planned supplies and services expenses, and carefully analyzed operations for efficiencies and further reductions.

The City Council appointed a volunteer Community Budget Advisory Committee in May 2020 to develop 2021 budget scenarios that prioritized options of service reductions that included input from the community on what they value most.

Has the City considered other sources of revenue to solve the problem of the budget shortfall? For example, using liquor taxes, program fees or rentals instead of property taxes.

Property taxes typically comprise 68% of the revenues that support the General Fund budget. Other revenue sources include permit fees, license fees, grant revenues, program fees, and lodging and admissions taxes. Lodging and admissions taxes usually generate about 13% of the City’s General Fund revenue. Due to the pandemic, these revenues have declined by more than $5 million, and are less than half of what was collected before COVID-19.

The committee looked at program fees and is proposing increases in certain areas. Competition keeps the City from making large fee increases – for example, golfers have choices about where they choose to play rounds.

Can projects be postponed such as street maintenance or building a new community center?

In 2020, several construction and capital projects were postponed. For example the pavement maintenance sealcoating program was cancelled in 2020. The City is not currently working on any plans to replace Creekside, including the location or design of a new community center.

Recessions like these can be good opportunities for the City to get more for its project money. This happened in the aftermath of 9/11, when the City in some cases saved 10-15% on projects.

Why does the City rely so heavily on the hospitality industry?

Bloomington’s location in the metro area, with prominent highway access and convenient access to the airport, makes it a natural location for hospitality businesses. The City has worked for decades to use these features to its advantage. The result is a vibrant, growing hospitality industry with a strong national brand. It employs many Bloomington residents and generates lodging tax revenue that lowers Bloomington property taxes by about 10%. The pandemic-driven decline in lodging tax revenue just proves how this industry helps keep property taxes low. It’s painful to watch the near-term impact of the pandemic on hospitality jobs, but industry analysts expect it to recover in a three to five year timeframe. It’s not just Bloomington that is excited about the long term prospects of the hospitality industry. Cities throughout the metro area are working hard to add hotels in order to get the same benefits that Bloomington has received for decades.

Background

Members

The advisory committee is made up of nine members who have knowledge of municipal budgets and City government. Through the coming months, the Community Budget Advisory Committee will engage community members and review the City’s budget and services to provide the Council recommendations given the budget challenges. By looking at the overall budget instead of reducing services one by one, the City Council and City staff are aiming to make sure service changes reflect what community members value most.

Neil Peterson (Co-Chair)

Steve Peterson (Co-Chair)

Akua Asare

John Gibbs

Three Rivers Park District Commissioner
Comcast Corporation’s Senior Vice President of Government and Regulatory Affairs, with responsibility for the nationwide state-level government affairs for Comcast and NBCUniversal including the formation of legislative strategies and policy initiatives.
Current member, Three Rivers Park District Board of Commissioners (formerly Hennepin Parks) representing Bloomington, Eden Prairie and Richfield. This follows a ten year stint on the Hennepin County Library Board (three years as president). John Gibbs is also a member of the board of the Minnesota Chamber of Commerce and the Minnesota Business Partnership as well as the boards of Artistry Theater and Visual Arts and the Minnesota River Valley Chapter of the Izaak Walton League. Gibbs is the former chair of the Hennepin County Policy Advisory Committee, a former member of the Bloomington Charter Commission, former member and chair of the Bloomington Cable Commission.
Graduate, Bloomington Lincoln High School
BA, History, Geography, University of Minnesota
JD, William Mitchell College of Law

John Laux

Jessica Linares-Kunkel