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Minneapolis Mayor Jacob Frey proposed a $1.88 billion budget for the upcoming year, in an address Wednesday that prioritized investments in affordable housing and economic development, as the city grapples with rising costs.

The proposed budget includes an 8.1 percent property tax levy increase — the largest lift in over a decade. 

Frey called 2025-2026 a “difficult budgetary cycle,” squeezed by “higher but necessary” labor costs, the absence of COVID-19 relief funds and a changed tax base as commercial property values have declined. 

“My administration worked to find ways to do more with less, and I’m really proud to say that we did. Now I’m not expecting us to celebrate this lift, because our residents have a new lift of their own in property taxes. But this budget provides a way through,” he said. “We’re doubling down on programs that work. We’re ensuring our resources are used effectively, and we’re making sure our communities feel the benefit.”

Frey said he was still committed to prioritizing core values, despite increased financial pressures. Among those priorities: affordable housing, climate action and inclusive economic development.

Frey’s proposed budget includes $17.9 million for affordable housing production, through the Affordable Housing Trust Fund. And a continued $2.2 million investment into the Stable Homes Stable Schools program, which he celebrated as providing housing and assistance to more than 4,800 Minneapolis Public School students.

New spending related to affordable housing and addressing homelessness would make up over a quarter of new spending, totaling $8 million for 2025.

Part of the budget squeeze also comes from the price tag of adhering to police reforms mandated by the Minnesota Department of Human Rights. Those costs are set to rise, with anticipated reforms required by the U.S. Department of Justice, but Frey said the budget aims to get ahead of that. 

He proposed $1.3 million for new staffing that would help ensure the police department is compliant with the court agreement, and $20 million for facility improvements. That includes $17 million for the South Minneapolis Community Safety Center, which will be the site of a new third precinct police building and other violence prevention resources.

Frey said that center will be functioning sometime early to mid-2025.

He also provided more clarity on the future of George Floyd Square, announcing a street layout decision will be finalized within months. He proposed $2 million for supporting business owners in the community in 2026 and $300,000 to help preserve artworks at the square. 

“People need to know that progress is happening. They want to know how the street, the layout, a memorial, the Peoples Way, will honor our history and improve their neighborhood,” Frey said. “Action is finally afoot, and we’re investing in a plan to get us there.”

The mayor celebrated gains in revitalizing the city’s downtown core in the wake of the pandemic. Downtown activity is up 45 percent compared to last year, 

“The momentum and pace of change must continue,” Frey said. He proposed more than half a million to revitalize Nicollet Mall and downtown, as well as $1.43 million for the Vibrant Downtown Storefronts and Cultural Districts program, which aims to fill vacant storefronts with local art. 

Still, commercial property values are down, which means the tax burden falls more heavily on homeowners — a continued shift reflected in the proposed property tax levy increase.

Ahead of the summer, Frey forecasted a $21 million budget deficit that looked likely to raise the property tax levy increase by over 10 percent. But city staff said workaround solutions, including pulling $19 million from reserves, brought the proposed property tax levy increase to 8.1 percent.

That’s a heftier lift than recent years, although not unheard of. Each year between 2004 and 2008 saw about an 8 percent increase, according to city staff. For the median single-family home in Minneapolis, the 2025 increase would tack on an additional $207 in property taxes.

“The way people use downtown is changing, and so we must adapt to a new future,” Frey said. “The way property taxes are collected is changing, and we must find new revenue streams that don’t disproportionately impact low-income residents.”

The Board of Estimate and Taxation will set the maximum property tax levy in September, after reviewing the budget and holding public hearings. The Minneapolis City Council will also hold public hearings and likely make changes to the budget, before voting to send it forward to the mayor for a final sign-off in December.

St. Paul Mayor Melvin Carter proposed his $855 million budget for the upcoming year Tuesday, which includes a property tax levy increase of 7.9 percent. 

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Cari Spencer

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Frey called 2025-2026 a “difficult budgetary cycle,” squeezed by “higher but necessary” labor costs, the absence of COVID-19 relief funds and a changed tax base as commercial property values have declined. 


Minneapolis Mayor Jacob Frey proposes $1.88 billion budget

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