State cuts will impact local entities

• Gov. Tim Pawlenty

File Photo: Gov. Tim Pawlenty said the state needs to trim its budget, even though a budget report was better than expected. (Don Davis/State Capitol bureau)

Talk about it

WORTHINGTON — Today, Gov. Tim Pawlenty will present his plan for balancing the state budget to the Legislative Advisory Commission. His proposal includes delayed payments to schools and a nearly $736 million unallotment of payments to local governments, health-care programs and colleges during the next two years.

Locally, the measure will affect some entities more than others. Here’s a look:

District 518

There will be no unallotments to the K-12 educational system, but the governor will delay a portion of school aid payments — $1.8 billion statewide — until next fiscal year.

That measure should not affect school spending, Pawlenty said, and that holds true in District 518.

“It won’t really affect our budget because we’ll still get the revenues we’re going to get; we’ll just get them later,” said Dave Skog, the district’s director of management services. In the meantime, the district will account for deficits in its roughly $28 million budget with other funds.

The district will receive 73 percent, or about $16 million of its total $22 million payment allotted for fiscal year 2010, which begins in July. The remaining 27 percent will be paid next summer at the start of fiscal year 2011, along with the amount the district would normally receive for that year.

Such deferrals have been used historically to gain one-time savings in the state budget, but the percentage delayed has varied. Last year, District 518 received 90 percent of its total allotment, with 10 percent being delayed.

Minnesota West

A reduction of $50 million in the payments made to the Minnesota State College and University System in fiscal year 2011 means Minnesota West Community and Technical College will be affected, but President Richard Shrubb said he doesn’t yet know how much.

If the college takes an equal share of the burden, slightly more than $1 million would be cut from its payment, Shrubb said.

He hopes to absorb the cut by discontinuing programs with low enrollment and taking advantage of staff retirements to save on costs.

Dean of Communication and Enrollment Gary Gillin said: “We’ve been planning for this for some time, not necessarily the unallotment, but certainly the budget crisis. We’ve been making adjustments. … We’re hoping we made enough reductions in fiscal year 2010 so fiscal year 2011 might not be as difficult.”

Cities

A total of $200 million will be cut from Local Government Aid payments to cities across the state.

“It wasn’t as large as what the governor proposed (originally), so to that extent it was better than what could have been,” said Worthington City Administrator Craig Clark, but the city will still face a $190,212 cut to its certified 2009 LGA payment of $3.1 million.

“(Gov. Pawlenty’s) pledge to not raise taxes as a campaign promise … has caused a major ripple to cities dependent of Local Government Aid” Mayor Alan Oberloh wrote in an e-mail to the Daily Globe. “Low to moderate wealth cities will have to cut services and/or raise taxes to provide essential services,”

Oberloh has said he will not raise taxes to offset the $629,100 in reductions during the next two years.

“Property taxes would be so skewed in rural Minnesota that we would have an exodus out of the community,” he said. “We realize that we have to share in the cuts, but we were hoping that the governor would not try to balance the budget on the back of cities.”

“Our aldermen aren’t any more interested in raising taxes than Gov. Pawlenty was, but we don’t have any magic formula; we need to provide the services our citizens expect,” said Clark, adding that the Dec. 26 unallotment of $228,900 from the 2008 LGA payment only compounded the problem.

The city’s total LGA payment for this year will be about $2.95 million, down from the $3.4 million the city received in 2002.

“As the old saying goes, this one’s going to leave a mark,” Clark said, adding that department heads and council members will all work together to balance the budget.

In Windom, City Administrator Steve Nasby said the city council “tried to anticipate the worst,” budgeting based on the governor’s original plan, which proposed about $144,000 in cuts to Windom’s 2009 LGA.

Now, Windom will see a lesser cut of $94,753 to its 2009 certified LGA payment of $1,334,068; and a cut of $218,631 in 2010.

The council reduced funds for some city programs and didn’t hire part-time park maintenance workers for the summer months.

The larger cut in 2010 will be a different story, Nasby said.

“That will have a much more significant impact on city services,” he said.

Counties

The plan also includes a $100 million reduction in Local Government Aid payments to most counties during the next two years.

In Nobles County, the certified 2009 LGA payment was $1,232,734. That amount was reduced by $127,624 in 2009, and there will be another reduction of $259,115 in 2010, for a total cut of $386,739 during the next two years.

Here are the proposed amounts by which county aid will be reduced during 2009 and 2010: Cottonwood County: $263,921; Jackson County: $307,464; Murray County: $202,961; Pipestone County: $189, 267; Rock County: $167,250.

Complete information about proposed cuts to cities, towns and counties is available on the Minnesota Department of Revenue’s Web site, www.taxes.state.mn.us.

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