With 2026 budget planning underway, Minneapolis is navigating federal funding cuts and long-term fiscal uncertainty.
The 2026 budget explores ways to reduce costs while preserving essential services, Minneapolis Mayor Jacob Frey said in an August budget address. Frey proposed a $2 billion budget for 2026 that includes $23 million in non-critical cuts.
“This was not an easy budget year,” Frey said in the budget address.“It is also not a crisis budget. This is a disciplined budget.”
Departments this year were asked to evaluate their services and recommend cuts to non-core programs, Frey said. His main priorities to protect include affordable housing, public safety, climate action, public health, community safety and economic inclusion, according to a City of Minneapolis budget brief.
The proposed budget includes no staff layoffs, and maintains funding for Affordable Housing and other core services, Frey said. Proposed 2026 budget cuts include ending police double-overtime pay and phasing out non-critical vacant positions across city departments, according to Frey.
This year’s budget also involved planning for the unknown, Frey said in his address.
“Washington, D.C. is in chaos,” Frey said. “Federal cuts have become a regular threat. And with Donald Trump in office, the uncertainty isn’t just about politics — it’s about whether cities like ours can rely on federal partnership at all.”
To maintain current city services, the proposed property tax levy increase started at 13%, but was lowered to 7.8% through savings and cuts, according to Frey’s address. The proposed property tax will raise an additional $39 million in Minneapolis to pay for essential services like police, fire and road maintenance, according to a Minneapolis budget-in-brief.
City Council weighs in:
At Budget Committee meetings, which city council members are a part of, members review the mayor’s budget proposal, listen to department heads and hold public hearings to gather resident input. In mid-December, the committee will finalize amendments to Frey’s initial plan and submit the revised budget for his approval.
Council members said some of Frey’s proposed $23 million in cuts target critical programs, including the reallocation of $1.4 million from a not-yet-launched Emergency Housing Voucher initiative to the Stable Homes Stable Schools program, which helps families at risk of homelessness secure stable housing, MPR reported.
The EHV program is a strong tool to effectively address unsheltered homelessness, City Council member Robin Wonsley (Ward 2) said in an email statement to the Daily. She added another proposed cut is the Senior Housing Abatement program, which helps keep seniors housed.
Wonsley said in the email she plans to bring forward proposals to fund both programs and the SHSS program.
Overall, with COVID-19 relief federal funding ending and federal cuts, Minneapolis is facing significant financial challenges, according to Wonsley’s email. About 35% of Minnesota’s state budget relies on federal grants, with $483.3 million at risk and $157 million already cut, according to the Minnesota Department of Management and Budget.
Proposed Property Tax Levy
Hennepin County Commissioner Angela Conley said the proposed 7.8% property tax levy is the highest she has seen in her seven years in office. Conley represents District 4, which lies entirely within Minneapolis.
Conley said Hennepin County is looking for ways to reduce the proposed levy and diversify its revenue sources moving forward. She added property taxes are counties’ primary source of revenue for maintaining core services such as food access, health care and other resident-facing services.
The 2026 proposed property tax levy would generate roughly $1.1 billion, around 35%, of the total proposed Hennepin County budget, according to the county’s Revenue and Expenditure data. Like Minneapolis, the County is attempting to plan for the unknown amid federal cuts, Conley said.
“We do not know what else they’re going to cut,” Conley said. “The federal government has been disastrous for counties.”
When it comes to the administration of essential services like the Supplemental Nutrition Assistance Program, which provides food benefits to low-income individuals and families, residents rely on the county, Conley said.
SNAP made up 74% of the expected $2.3 billion in federal funding for food-related programs in Minnesota’s Fiscal Year 2025 budget, according to the Minnesota Department of Children, Youth, and Families.
Association of Minnesota Counties executive director Julie Ring said in a Minnesota Senate committee hearing that over the next five years, administrative costs, benefit costs and SNAP-related workload will increase under new federal policy.
According to Ring’s presentation, costs shifted onto counties could total more than $100 million annually, based on Minnesota’s current caseloads and error rates. Ring said this will increase budget strains and property taxes statewide.
Meanwhile, the need for core services is rising, City Council member and Budget Committee chair Aisha Chughtai (Ward 10) said during a Friday budget committee meeting. In South Minneapolis, the area Chughtai represents, people are committing crimes of desperation as poverty grows, she said.
“The amount of poverty our city is experiencing, especially in different parts of the South Side,” she said. “That’s only growing; we are seeing the number of people going to food shelves at an all-time high.”
In 2024, Minnesotans made 9 million visits to food shelves, a record high for the fourth consecutive year, reported The Food Group, a food bank and advocacy group.
Minnesota counties also administer Medicaid eligibility and renewals, under a new federal policy passed through the One Big Beautiful Bill Act. Those costs are expected to increase significantly, Minnesota Department of Human Services officials said during a House Committee Hearing this July.
Hennepin County believes all people should have access to healthcare and food, Conley said.
“The Federal government said well, if you believe that, then you pay for it,” Conley said. “I don’t believe that we balance our budgets on the backs of the most vulnerable people in our society.”
As Hennepin County finalizes its budget, maintaining programs focused on food justice, climate, health care and housing remains non-negotiable, Conley added. The county will do whatever it takes to ensure residents are cared for, regardless of where they live or how much money they have, she said.
“It is my belief that dignity and the respect of human beings is not something that’s being uplifted by the federal government right now,” Conley said. “So it is on us as that first line of defense.”
