St. Paul stares down $20 million deficit in 2021

St. Paul will confront a nearly $20 million deficit in 2021, but Mayor Melvin Carter's budget proposal does not call for layoffs, dipping into emergency reserves or raising the property tax levy.

In a virtual address Thursday from City Hall, Carter explained how he plans to keep the capital city afloat amid the uncertainty of the COVID-19 pandemic and resulting economic crisis. He said his proposed budget "will result in significant pain points for our community" but will attempt to keep essential services intact and offer lifelines to residents facing financial hardship.

"Even in the face of unprecedented budget challenges," Carter said, "we must protect and preserve the front-line services and staff that our residents and businesses rely on as much as possible."

The proposed 2021 budget is $627 million, down 1.4% from the $636 million in 2020. The property tax levy — the amount of money the city collects in property taxes — will stay flat at $165 million.

Even with no change in the city, county or school district levies, the estimated total 2021 tax bill for a median-value home in St. Paul — valued at $215,800, up 8% from last year — would be $2,998, according to Ramsey County auditor/treasurer Chris Samuel.

The City Council can set a different levy from what Carter proposes. Council members are expected to vote on a maximum levy increase in mid-September and approve the final budget in December.

The 2021 address lacked the celebratory tone of Carter's first two budget addresses, which served as opportunities for the mayor to unveil new initiatives to a cheering crowd.

Still, Carter announced plans Thursday to use a portion of the city's $23.5 million in federal CARES Act money to address homelessness and launch a $500-a-month guaranteed income pilot for up to 150 families.

CARES money, allocated by the state, must be spent by mid-November and cannot be used as a revenue replacement.

Like cities across the country, St. Paul is already facing a multimillion-dollar deficit this year, in addition to expected losses in 2021.

St. Paul begins every budget season with a gap of $15 million to $17 million — largely because of inflationary increases in salary and health care costs — but pandemic-related revenue losses in property taxes, sales taxes, parking revenue and building permit fees have added pressure.

This year, the city expects a $19.5 million shortfall.

To fill the gap without raising the levy, Carter is proposing cuts to every city department except the Office of Technology and Communications, which he said is vital as the city continues to operate remotely during the pandemic. City employees will likely face reduced hours and titles, Carter said, and the senior leadership team has been asked to take a voluntary 10% pay cut.

"I think we can solve this through vacancies and attrition," Carter said in a phone call with reporters. "Across the board, we have to rethink how we get our work done, and that's something that I think our staff is up to."

The departments facing the biggest cuts are libraries, public works, safety and inspections, parks and recreation, and police.

Chief Todd Axtell had prepared for up to $9.2 million in cuts. Instead, Carter's budget would reduce the force's authorized strength by 10 officers — including seven school resource officers the school district decided in June to eliminate — and and require that at least 31 officer positions go unfilled.

When accounting for inflationary costs to salaries and benefits, the 2021 proposed police department budget would be about $3.7 million less than in 2020.

"Considering the unprecedented budget challenges cities across the country are facing, it could have been much worse," Axtell wrote in an e-mail to staff Wednesday, adding that the department would have to forgo this fall's Police Academy.

The cuts come amid a surge in gun violence in the capital city, where shots-fired calls have more than doubled compared with this time last year. Homicides, now at 21, are up from 12 last summer — during a stretch leaders considered among the worst in recent memory.

St. Paul Police Federation President Paul Kuntz warned that fewer cops would result in slower response times, potentially delaying or denying justice to crime victims.

"Reducing the police force — even through attrition — is dangerous," Kuntz said. "We have to maintain staffing levels just to keep our heads above water."

In November, faced with the city's highest homicide rate in 25 years, Carter proposed a $1.7 million supplemental public safety budget that invested in services including community ambassadors, youth employment and alternatives to prosecution instead of more cops.

Programs the supplemental budget was intended to pay for have been slow to roll out, but Carter repeated his intent to continue investing in "community-first" public safety in 2021.

Carter said the goal "is to lighten the load for our officers" so they can focus on preventing and responding to violent crime and doing proactive community outreach.

In an interview, Carter said a task force of community members and public officials will figure out how to create rapid-response teams to respond to low-priority 911 calls.

Task force recommendations are expected in time for the 2022 budget, he said.

Emma Nelson • 612-673-4509

Liz Sawyer • 612-673-4648