Governor's cuts force local cities, county to look hard at budgets
Gov. Tim Pawlenty's Local Government Aid unallotment announcements earlier this week will affect some government entities more than others.
Park Rapids will see a decrease of 3.31 percent in 2009, or about $74,778. In 2010, the decrease will be even more, 7.64 percent, or $172,541.
"We already adopted a very conservative budget this year," said Administrator Bill Smith. "Now we're going to have to make cuts where it will hurt."
He said the city should be able to find $75,000 this year but he's worried about 2010, when the city will need to find $173,000.
Department heads will begin looking at their budgets for 2010 and will have to make some tough decisions, Smith said.
"In this time, you don't want to talk about it, but it could be jobs," he said of the cuts.
Raising property taxes isn't really an option, Smith said. There is a cap on levies.
Union contracts will be up for negotiation at the end of the year and Smith said there will need to be serious discussions.
"All of us outstate are hurting," said Park Rapids Mayor Nancy Carroll. "We don't have huge staffs."
She believes the LGA unallotments are unfair to outstate Minnesota communities.
The Coalition of Greater Minnesota Cities has organized data showing that some cities with lower property wealth require LGA to maintain a fair tax rate.
Hubbard County's Board of Commissioners only briefly discussed the pending Local Government Aid cuts after its regular meeting Wednesday.
In the coming year, Hubbard County will need to cut 1.9 percent of its budget, or just over $136,000.
"If we can't cut our budget by 2 percent, I don't know what's wrong with us," board chair Lyle Robinson said.
In other words, the sky isn't falling - yet. But Robinson admitted the challenge will be the following year, when the county will need to reduce its spending by twice that amount, or 3.8 percent.
But the county also has a year to plan for the more drastic cuts.
The county has already enacted a hiring freeze and has directed departments to reduce spending and devise ways to increase revenues.
The most difficult issues will be increases in insurance premiums for employee benefits and other outside expenditures the board can't control, like cuts to human services when needs keep rising.
Currently, county employees are among the highest paid in the region and contribute little money to their monthly health insurance premiums. Robinson said there may be some tough negotiations next year with the employee labor unions to get those costs to a more manageable level.
Menahga city officials said they expected more cuts than what they were hit with.
The proposed unallotment amount was approximately $35,000, said city administrator Teri Osterman and the final unallotment announced this week was $21,314.
"We'll be fine," Osterman said. "It's not a real big hit for us."
Department heads have already been discussing budget cuts knowing they would have to scale back.
"They're very conservative here, and they try really hard to stay in budget," Osterman said.
She added that the city will not have to resort to employee layoffs.
The 2010 proposed cuts will total $49,180 or 7.64 percent of the budget, according to Pawlenty's plan.