Minneapolis Mayor RT Rybak will present his recommended 2010 budget at City Hall today.
The city is facing a $21 million reduction in state aid and increasing pension obligations that will cost an additional $18 million a year.
Minneapolis finance director Pat Born says the mayor can call for a hike in property taxes to the maximum limit. But he said that won't be enough to cover the shortfall caused by the loss of state aid.
"For the last several years we've been increasing our property tax levy at eight percent a year. And eight percent is about $18 million which is less than the permanent cut to our state aid revenue," he said.
City leaders have been asking state legislators to approve merging the underperforming pension funds with the larger state pension fund. They'll continue to push for that in the next session.
The city was recently awarded a federal grant that will allow it to hire 13 community service officers next year. The city also used federal stimulus money this year to avoid laying off police officers and firefighters.