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State aid cuts hamper local budget planning

By Staff | Dec 22, 2008

The Winnebago City Council is rolling the dice when it comes to how much state aid the city will get.

Tuesday night, councilmembers approved a tax levy increase of 12.33 percent for 2008 that’s collected in 2009.

The city is scheduled to receive $281,533 in state aid at the end of December.

That second aid payment could be cut between $11,100 to $58,900, says City Administrator Jennifer Feely.

The shortfall could be made up from reserves the city has, says Feely. Although next year could be the same story because the state must find a solution to its $5 billion deficit.

Feely is recommending councilmembers certify a 21.4 percent levy hike proposed in October.

Councilmen Rick Johnson and Paul Loomis weren’t too keen on the suggestion. “We have a lot of reserves and I don’t see why we should tax the people more than we need to,” says Loomis.

Johnson says going back to a 21 percent increase would be “setting a big precedent and I can’t do that.”

Because city officials do not know how much state aid to expect next year, Feely has directed department heads to identity cuts of up to 25 percent.

The police and public works departments, says Feely, have already come up with ways to save.

“I would hate to see first cuts going to police and fire departments,” she says. “Public works, they are very flexible.”

Feely has met with public works department workers and one option discussed would be to delay major street repairs and just do patchwork.

Councilmember Maryann McClain says city officials should start now at looking for ways to trim dollars.

She suggested implementing a pay freeze, which could save about $14,000, and cutting some office staff hours.

“If worst comes to worst the part-time position in public works could be cut,” she says. “I’m not suggesting tonight to make those cuts.”

Winnebago was scheduled to get $563,065 in Local Government Aid this year. Next year it is expected to be increased to $578,934.

Blue Earth officials also may be scrambling on what to do.

City Administrator Kathy Bailey says estimates from the League of Minnesota Cities show the city could lose $32,300 to $171,900 from its December aid of $707,000.

Bailey says there isn’t much in reserves for officials to dip into. She says there are some monies in the liquor store fund that could be used.

“Other than that we really don’t have a piggy bank sitting somewhere. I wish we did,” adds Bailey.