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County, cities get word on state aid cuts

By Staff | Dec 29, 2008

Faribault County and three of its cities received harsh Christmas presents from the State of Minnesota just before Christmas.

Governor Tim Pawlenty announced the amounts of cuts in Local Government Aid (LGA) for the end of the December payments.

Faribault County’s state aid payment, due on Dec. 26, will be reduced by $133,635.

Three of the cities in the county will also see major reductions in their year-end LGA payment.

Blue Earth will have a reduction of $109,755; Winnebago will have a $37,633 cut, and Wells will get a check for $60,806 less than expected.

Since cities of less than 1,000 population were not cut, other cities in Faribault County were not affected.

The cuts are all part of the state’s efforts to balance the budget by the end of the year, eliminating a $426 million deficit.

The total cuts in LGA state-wide were over $66 million. There was $44 million cut from LGA to counties.

The rest of the budget shortfall was made up by cutting state agencies ($40 million), health and human services programs ($73 million), University of Minnesota ($20 million), MNSCU ($20 million) and other agencies.

Blue Earth City Administrator says these LGA cuts are for the second half payments for 2008.

“Most cities have already spent this money for this year’s expenses,” she says. “We need the payment to replenish our funds and get us through the first months of 2009.”

The real problem, Bailey says, will come in 2009 if similar cuts in LGA payments are made to help balance the $4 billion revenue shortfall anticipated in the next two years.

“We have been told we need to expect equal cuts in the 2009 funding,” Bailey says.

Since the city budget has already been set, using the full LGA amounts first announced by the state, the city will have to review the budget starting in January, and identify places for reductions, Bailey says.

“It is going to be a difficult year for many cities, if these cuts continue to be made,” she said.