The city is self-insured, so taxpayers are footing the bill directly.
Minneapolis has a dedicated budget for this, but the payouts have been so large they've exhausted the self-insurance fund and had to cover the excess using the general city budget. As a result police misconduct is taking funds that could go elsewhere. The police department pays into the self-insurance fund like other municipal agencies, but that payment is accounted for already in the budgeting process, therefore these payouts don't actually affect the police budget when the costs exceed the fund.
You'd think conservatives would care more about how much police misconduct is costing taxpayers. The extent of the problem is also poorly documented in a lot of jurisdictions. So it is difficult to know how much police are costing cities and taxpayers.
Police officers themselves rarely have to pay for their own misconduct. And even when a police department pays for part of the misconduct, budget maneuvers like in Minneapolis tend to shift the costs back to the city instead such that there isn't much disincentive for the police department.