State cuts BE $250K this year
The Blue Earth City Council finally heard the bad news they have been anticipating all year.
The State of Minnesota is cutting the city’s state aid by over a quarter of a million dollars for 2011.
The exact number is $252,094.
City Administrator Kathy Bailey delivered the bad news at last Monday’s regular City Council meeting.
“The cut in our Local Government Aid (LGA) is $155,250,” Bailey told the council. “But, we are also getting our Market Value Homestead Credit (MVHC) cut by $96,844.”
Bailey says the city received their July half year LGA payment and it totaled $767,909 instead of the $1,692,069 it was originally supposed to be.
The city will be cut by the same amount in 2012, but in that case the $96,844 will be paid by local property taxpayers who do not get the MVHC credit.
“This is a big blow,” Bailey says. “With just five months remaining in the year, this is a lot to take all in.”
Essentially the city has to trim $250,000 from its current budget, with over half the year already done.
“I think council member Allen Aukes’ suggestion last meeting that we look at trimming 10 percent from each department next year might have to be done now,” Bailey says. “Although some departments can’t handle a 10 percent cut.”
Bailey says she wants each council member to come to the next meeting with suggestions of areas to cut back on. The topic of cutting the budget was put on the work session agenda for the next meeting. Aukes says the 10 percent figure was not mandatory, but a target figure.
City Council member John Gartzke asked Bailey if there were any areas, such as capital expenditures, which could be put on hold immediately.
She replied that a scheduled purchase of a snow plow could still be made with $47,000 currently in an equipment fund. Other purchases could be put on hold, however.
“We have put some of these capital equipment purchases on hold for three years now (due to LGA cuts)” Bailey says. “At some point we have to address these needs.”
Other budget areas the council briefly mentioned were health insurance costs and the $50,000 donation to the Faribault County Development Corporation (FCDC).
Councilman Gartzke had asked at an earlier meeting for a report on health insurance costs.
“I wonder if there is any way to save money in this area,” Gartzke says. Bailey responded that there are 22 different plan options which can be studied.
For the FCDC donation, Councilman John Huisman advised using caution before cutting that contribution.
“Cities need to be leaders in this area (economic development),” Huisman says.
In other business, the council authorized a $608,000 sanitary sewer lift station project.
Mayor Rob Hammond suggested the vote be postponed in order for the council to be able to study the proposal in depth, but Bailey and City Engineer Bill Sayre replied that in order th get the work done this year, it needed immediate attention.
Councilman Glenn Gaylord agreed.
“We have been looking at doing this for some time, I’m ready to vote on it,” he says. “We need to try and get it done this year.”
Hammond and Councilman Gartzke both rescinded their objections to voting on the project at last Monday’s meeting and the vote was unanimous to proceed.
Gartzke questioned whether the city would need to bond for the project.
Bailey responded that the project will not need to be bonded for in order to finance it.
“We have enough in our wastewater fund to cover the cost,” she told the council.
Plans and specs for the work will be done as soon as possible.