Posted: 6/4/03

FL begins budget tasks in wake of state LGA cuts

Cliff Buchan
News Editor

Now that state lawmakers have burned the midnight oil in solving a state budget deficit, local officials are left to dealing with the handiwork in St. Paul.

One of the key components of Gov. Tim Pawlentyís plan to erase a $4.2 billion budget shortfall in the next biennium was a change in the local government aid paid by the state to cities across Minnesota. And the governor kept good his pledge to slash LGA.

Forest Lake and Wyoming budgets are minus nearly a million dollars this year and next as a result of state reductions in LGA and market value homestead credit originally earmarked for the two cities.

City Administrator Chip Robinson said Monday he is proceeding with still preliminary facts that show Forest Lake will lose all of its $321,915 in local government aid in 2003 and 2004. Figures were provided by the League of Minnesota Cities.

The city will also lose $56,254 of its MVHC in both years but will retain $247,536 of MVHC which is money paid by the state to cities in lieu of property tax credits that go to homeowners with property valued at $100,000 to $440,000, Robinson said.

Wyoming will lose all of its LGA or $105,903 in 2003 and again in 2004.

Wyoming will catch a break on its MVHC, however, by retaining all of its anticipated funding of $86,361 in 2003 and 2004.

Wyomingís budget in 2003 and 2004 will be short $211,806 as a result of the state budget resolution approved and signed into law last week.

Forest Lakeís two-year budget hit amounts to a loss of $756,358 in state aid, according to the LMC figures.

What is next

Heading into 2003, Robinson made provisions in the city budget for a loss of $150,000 in form of state cuts.

ìWe are now more than double that amount,î he said.

He is in process of meeting with department heads in search of ways of trimming spending and evaluating programs.

A number of steps have already been taken to cut expenses.

Robinson said the city will save about $100,000 by not hiring one additional police officer and a park employee. Both slots has been anticipated in 2003, he said.

The city will save another $80,000 by holding off on the purchase of one squad car, computer equipment and delaying seal coating and other maintenance projects.

He said the city will look at programs like the annual spring Rid Litter and the city compost site to determine ìwhat value they have.î

He believes a more difficult challenge will come in preparation of the 2004 budget. ìNext year is going to be a little tougher,î he said.

While the city can put off some capital equipment needs and projects now, those needs must be met at some point soon, he said. He is hopeful the city can get through this financial crisis by not eliminating jobs.

More options

Robinson says the city has two others options ó dipping into city cash reserves or using state authority that is part of the budget bill to levy back 60 percent of the state aid cuts to local taxpayers.

The latter option, Robinson said, would enable the city to collect $227,000 of revenue in 2004 through additional city property taxes.

The additional tax matter will be a topic for the city council during its late-summer and early-fall budget process for 2004.

Dipping into reserves is a step Robinson is resisting for now.

ìI hesitate to do that,î he said. ìWe have just built it (reserve level) back to where it should be.î

Over the past five years the city council, acting on recommendations from its auditor, has taken steps to rebuild its cash reserves to protect against unforeseen expenses and emergencies.

General fund reserves are ample to cover the shortfall but dipping into the fund would erase the work of the past years, Robinson said.

Robinson said he expects to begin talks with the city council during regular council meetings on June 9 and June 23.

Other area cities

The following is a look in brief at how the state action hit other cities in this area.

ïNorth Branch ó loss of $236,600 in state LGA in both years but a retention of its $218,747 in MVHC.

ïLindstrom ó loss of $80,308 of its anticipated LGA payments of $172,854 in 2003 and 2004. Lindstrom will retain all of its MVHC aid of $70,691 in both years.

ïChisago City ó loss of $124,517 of its anticipated LGA total of $352,759. Chisago City will retain its $73121 MVHC aid.

ïHugo ó loss of its entire LGA payment of $31,481 in both years and a cut of $145,785 of its MVHC aid of $205,923. Hugoís total budget hit is $178,245 in both years.

ïLino Lakes ó loss of its entire $157,735 of LGA and $389,919 in MVHC in 2003 and 2004. The two-year budget hit in Lino Lakes is $1,095,308, according to league statistics.

In the case of North Branch, Lindstrom and Chisago City, cities outside the more metro area, all are projected to receive LGA payments beyond 2004, according to a state anticipated funding formula.

Top of Page