Legislators do some explaining
City and county officials from Faribault and Martin Counties had a chance to vent their frustrations to their legislators in Blue Earth Wednesday night.
“We realize our Local Government Aid (LGA) is going to be cut,” one official told the lawmakers. “But it would be nice to know by how much.”
Representatives Tony Cornish and Bob Gunther and Senator Julie Rosen explained the state’s situation to the full house at Hamilton Hall.
“The state is facing a $426 million budget deficit,” Gunther told the local elected officials. “By constitutional law we have to balance that by the end of this year.” Gunther added that according to the same law, the state first must spend down any reserves it has. He says they have $155 million in reserves, leaving $271 million to make up somewhere.
“Unfortunately it has to come from funds which were allocated earlier in the year, but not yet been spent,” Gunther said. “The second half payments of LGA have not been sent out, so it is a prime target.”
Gunther called the LGA “low-hanging fruit,” meaning it is the easiest money to reach and cut quickly.
“The governor and the house and senate leaders are studying the situation now,” Senator Rosen said. “I expect the governor to make an announcement in the next few days, as to what will be unallotted.”
Local officials complained that their budgets and levies for next year have already been set, and these last minute cuts to their funds will be difficult – if not impossible – to cope with.
Cities receive their LGA funds in two payments, one in July and one in December. The December half payment is due to be sent out on Dec. 26, the lawmakers said. It is that second half payment which will be cut.
“We need to know now how much the state intends to slash,” one Fairmont official said.
The legislators said they were not sure how much would be cut, since it is yet to be determined, or voted on. Rep. Gunther said the cities should be prepared, and he expects the reduction to be about 25 percent. If it is more than that, Gunther says he won’t vote for it.
“I agree this is bad timing,” Gunther said. “I know it comes after you have already set your budgets and levies.”
When asked how long the lawmakers have been aware of the budget shortfall, Gunther said they were told on Dec. 2.
The state is also looking at a $5 billion deficit in the next two years, he said. But Gunther said that will be easier to deal with, since they will be able to spend more time looking at many areas to cut.
“Cities will be affected again, but so will every other program,” Gunther said.
Rosen agreed this large budget deficit could be an opportunity to make major changes in the way the state funds programs.
“Last time we faced a deficit that large, we fixed it using reserve funds, and the tobacco settlement,” Rosen said. “This time we will have to make some changes in policies.”
Rosen did have some good news for local officials. She reported that local counties will be seeing some major influx of federal funds for transportation projects.
“We met with Congressman Tim Walz today, and he says $85 billion of the $700 billion federal stimulus money is for transportation,” she said. “Of that amount, Minnesota will be getting $875 million, and we will be working on how to disperse those funds around the state.”
Gunther, Rosen and Cornish also asked the city and county official to list their concerns over unfunded state mandates.
“Governor Tim Pawlenty has promised me he will take a serious look at these mandates as we solve the budget problem,” Gunther said.
Those concerns, voiced by local city officials, ranged from having to install $5,000 pool drain covers, to doing expensive audits for local projects.
“I realize safety is important,” said current Bricelyn Mayor Dan Klingbeil. “But it is tough to ask our 350 residents to cough up $5,000 for the pool, which loses money each year. It could cause us to close the pool.”