Frey Proposes $2 Billion 2026 Budget With 7.8% Property Tax Increase

Frey Proposes $2 Billion 2026 Budget With 7.8% Property Tax Increase

Minneapolis Mayor Jacob Frey has unveiled his proposed $2 billion budget for 2026, which includes a 7.8% increase in the city’s property tax levy—the largest in over a decade. If approved, the increase would generate an additional $39 million in revenue. For the owner of a median-priced home in Minneapolis, valued at approximately $333,000, this would mean an annual property tax hike of about $240.

Mayor Frey

Frey described the plan as a “disciplined budget”, crafted to protect core city services and address mounting fiscal pressures without resorting to drastic measures. He emphasized that without identified cost savings, the levy would have risen by 13% to sustain current service levels—an outcome he called “unacceptable and unaffordable” for residents.

Why the Increase?

The city is grappling with rising employee salaries, inflated construction costs, and a decline in downtown commercial property values, which has eroded tax revenue. According to Frey, these pressures require a balanced approach—pairing a modest tax increase with targeted cost reductions—to maintain essential services.

Key Cost-Saving Measures

To limit the levy hike, Frey’s administration identified roughly $23 million in savings by:

• Ending Double Overtime for Police – The “Critical Staffing Overtime” policy, which paid officers double time during a staffing crisis, would be replaced with a standard “time-and-a-half” rate, saving about $3.6 million annually.
• Cutting Vacant Positions – About 30 non-critical, unfilled city positions would be permanently eliminated.
• Reducing Events – The number of “Open Streets” events would drop from four to three.
• Scaling Back or Eliminating Underperforming Programs – Funds from “untested new initiatives” would be redirected to proven programs, such as shifting resources from an emergency housing voucher program to the Stable Homes, Stable Schools initiative, which provides housing stability for families with school-aged children.

Maintaining Core Services

Frey stressed that the budget avoids staff layoffs and continues funding for key infrastructure, housing, and public safety needs. The administration also prioritized fiscal caution in light of uncertain federal funding and broader economic volatility.

Next Steps

The proposed budget now moves to the Minneapolis City Council, which will hold public hearings, make amendments, and must pass a balanced budget before year’s end. The Board of Estimate and Taxation will set the final property tax levy limit later this year.

MinneapoliMedia