Pawlenty avoids storm, keeps local aid
News that Minnesota cities and counties will receive full state aid checks later this month appropriately came on a day when many were sending out snowplows and all were dealing with bitter cold weather as the season's first major storm whipped through the state.
Gov. Tim Pawlenty announced on Tuesday that he will not reduce or eliminate December state payments to local governments. Last week, he said that was a possibility as he looked to ways to help plug a $1.2 billion hole in the current two-year budget.
The Republican governor implied that future cuts were possible.
Some of state money sent to cities and counties in twice-a-year payments goes to plowing snow and otherwise fighting winter weather. A statement by Wadena Mayor Wayne Wolden and St. Paul Mayor Chris Coleman connected the storm and the state checks.
"As a major winter storm is bearing down on us, the critical role our cities play in the lives of our citizens is no more apparent than today," the mayors wrote Tuesday. "Across the state, cities are battling the storm by plowing streets, dropping salt and doing everything we can to protect the safety of Minnesota families. All of us know that this comes at a cost."
The mayors said that in the past seven years, cities have lost $754 million in local government aid. They blame a 64 percent increase in property taxes on the aid loss, although Pawlenty says cities can cut spending instead of raising taxes.
In a letter to city and county leaders, the governor wrote: "Given the imminent expected payment of December local aid, I have determined that additional local aid program cuts, if any, should be focused on future payments."
A year ago, Pawlenty faced another deficit and he reduced local payments that were sent around Christmas. That put cities and counties in a bind, they said, because their budgets already included the state aid payments and they had no way to make changes so late in the year.
About $437 million in state aid payments are to be sent to cities and counties later this month.
The governor's letter to city and county leaders made it clear that their payments remain open to future cuts.
"My administration will be working with the Legislature to formulate budget cuts that can promptly be enacted when the Legislature convenes in February," Pawlenty wrote.
Pawlenty, in South America on a trade mission this week, said that if lawmakers and he do not agree to a budget compromise next year, he will take actions on his own to reduce spending, and chopping local aids may be among those actions.
Rep. Paul Marquart, DFL-Dilworth, said an aid cut this month would have been the third in a year.
"There was no way cities could take three aid cuts in one year," said Marquart, chairman of a committee that deals with local aids.
Sen. Rod Skoe, DFL-Clearbrook, is chairman of a similar Senate committee and said that he sees no way to fix the local aid problem without new revenues, which likely would come from higher taxes.
"It is going to be very hard to solve it without the ability to put some more revenue into it," Skoe said.
Even keeping their full state aid payments, cities are hurting, Skoe said. "I have been hearing from some cities that they already are doing some short-term borrowing and they were counting on that payment to repay that short-term borrowing."
Pawlenty refuses to raise taxes and last week said he wants to fix the deficit only by cutting spending.
Marquart said he has some ideas to help the local aid situation, but would not reveal them two months before the next legislative session.
A Thursday Senate Taxes Committee meeting that was to deal with the impact of a December local aid cut was canceled after Pawlenty's announcement, but legislative leaders say the issue will be a major part of next year's budget talks.
"Everybody is going to have to figure out how to save money because we still have the $1.2 billion deficit that we have to solve," Skoe said. "It is going to be really, really challenging."
A report last week gave the deficit in the current two-year budget as $1.2 billion, out of slightly more than $30 billion in spending. The next budget would come up $5.4 billion short if nothing is done.
Pawlenty called for lawmakers to immediately begin discussing how to fix the budget and on he called for a solution to pass early in the legislative session.
State aid payments go to cities and counties each December and July.
Pawlenty's office reported that about 45 percent of the state's population, 2.4 million people, lives in communities that receive no city aid payments. He long has sought reform so cities do not rely so much on state aid.
Local government aid to cities was established to help communities that have too little taxable property to raise enough property tax to support basic needs. However, Pawlenty says, too many cities have grown too dependent upon state checks.