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Guess who pays for the state cuts

August 14, 2011
by Chuck Hunt, Register Editor
Readers of this newspaper (and every other one in the state) are probably getting sick and tired of seeing the same three letters in stories on the front pages.

LGA.

By now everyone on the planet must know that LGA stands for Local Government Aid. And by now, everyone understands that it is the money the state gives to the local government entities such as cities and counties, and everyone realizes that it is being cut by the state because of budget issues.

A story in last week’s Register detailed how much Blue Earth is getting whacked, while stories this week concern cuts in aid for Wells and Winnebago.

The numbers are significant.

But, while they appear to be large, they also might seem to be in the range which can be handled by the cities and counties. Until one realizes two things.

First, the cities and counties (and other groups as well) have been getting these LGA cuts for over two years. This means the cities and counties have been cutting away at their budgets already and any ‘fat’ is gone. Now the bone has appeared – as in cutting to the bone.

Positions have not been filled. Equipment not purchased. Departmental budgets have already been scaled back – several times. You get the idea. And you know this because you have read about it in this newspaper.

Secondly, this current round of LGA cuts are not for 2012, they are for this year. Cities and the county have to trim back on budgets that were set last December and have been in operation for eight months already.

Folks, a lot of the money has already been spent. Department heads knew they had so much in their budget and they have been spending it.

Now they may have to trim back on what is left.

Plus, this 2011 budget already was hit back in December, shortly after it was first created, with another LGA cut.

The point to all of this is that local citizens should not be in shock if they see their local property taxes taking a significant hike this coming year. That would come on top of whatever hike their city made in the tax in 2011.

Some cities, such as Blue Earth, have done what they can to keep the tax hike around a certain number, such as three percent. That may not be possible much longer.

The city of Wells has indicated they are able to absorb this cut in their 2011 budget, but not the one coming for the 2012 budget. That could translate to a hike in local taxes.

This seems to be the state’s plan, whether it is a conscious strategy or not. They are shifting a lot of their budget woes onto the local governments. And, while the state can say they are not raising any taxes. the local property taxpayer is still going to get hit with the bill, when property taxes have to go up to keep cities and counties operating.

What the state is doing to the schools is not as cruel, but still is going to hurt. They plan to give the schools only 60 percent of what they promise in aid when it is due, then give them the other 40 percent after the year is over.

Try planning a budget with that scenario.

Let’s say your boss tells you he is going to pay only 60 percent of your salary each week but give you the rest at the end of the year. I’m not sure others will let you pay only 60 percent of your mortgage and utilities bills each month.

Then, of course, there is the risk that your boss (or the state) will actually have the 40 percent stashed away and available to give to you at the end of the year.

Bottom line? Hold on to your wallet.

In the future you may be getting fewer local services but paying more in taxes for them.

Plus, the cuts are causing local governments to be a little creative in finding ways to balance their budgets.

In Blue Earth, the council has been exploring different options to furnishing police protection in town.

Whether they trim their own police budget or go with contracting with another entity for law enforcement remains to be seen.

But, the reason for the research is clear – saving money.

In Winnebago the council has initiated a franchise fee for businesses offering services in the community.

Unfortunately, that fee to the electric and gas companies will just be passed on to the consumers.

In most cases, those are the same folks who are going to pay any hike in property tax to make up the difference in loss of state LGA as well.

Ouch!

 
 

 

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