By Charlie Warner
Argus News Editor and
T.W. Budig
ECM Capitol reporter
“The news was better than we had anticipated. Our cuts will be about $25,000 less this year and $50,000 less than we had planned for in 2010,” stated Caledonia City Administrator Bob Nelson. Nelson was referring to local government aid (LGA) figures that were handed down June 16 as part of Gov. Tim Pawlenty’s budget balancing juggling act. Gov. Pawlenty coined his proposed $2.65 billion state budget unallotment as “a little less for a little while.”
Necessitated by the lack of a budget agreement during the last legislative session, Pawlenty’s proposed unallotment, which administration officials hope to finalize by the end of the month, plugs the budget hole in the state budget for the next two-year spending cycle.
Biggest cut falls on local aid
and human services
The two largest areas of budget cuts in Pawlenty’s proposed unallotment falls on local aid (local government aid LGA for cities and county program aid CPA for counties) and human services funding, cut $300 million and $265 million, respectively.
The bulk of the LGA and CPA cuts, as done in other budget areas in the unallotment process, hits the second year of the budget cycle. Cities with less than 1,000 population and five counties in Minnesota with approximately 5,000 population or less, were spared of the state aid cuts. The five counties are Kittson, Lake of the Woods, Mahnomen, Red Lake and Traverse.
Some of the proposed human services cuts include ending general medical assistance care about a month and a half sooner than would occur as a result of a line-item veto last session, reduce grants to counties, lower maximum hours that personal care attendants can work, suspends a payment increase to nursing homes.
Higher education is cut another $100 million — all the cuts fall on the second year of the budget.
State agencies, which already received a five percent budget reduction, are proposed for cuts of about two percent more — a reduction of $33 million. The Governor’s office is included in the reduction.
Impact on Caledonia
In February, the Caledonia City Council prepared for the worst and cut $97,995 out of the 2009 budget. At the time, “the experts” predicted LGA cuts in the $75,000 range for 2009 and twice that in 2010.
According to the latest unallotment figures, Caledonia’s 2009 LGA payment will be about $25,000 less than originally certified by the state. For 2010 the cut will be $109,147 instead of an anticipated cut of approximately $150,000.
There are only four cities in Houston County with populations over 1,000. Their populations and LGA cuts for 2009 and 2010 are:
Caledonia- pop. 2,923
2009- $ 47,304
2010- $109,147
Houston- pop. 1,003
2009- $22,066
2010- $55,165
La Crescent- pop. 5,157
2009- $ 83,924
2010- $193,645
Spring Grove- pop. 1,288
2009- $28,336
2010- $67,560
Impact to Houston County
Like the Caledonia City Council, the Houston County Board made massive cuts to the 2009 budget in anticipation of deep cuts ($566,000 in 2009 and $1.2 million in 2010) to CPA. The board cut over $550,000 in January. According to the latest unallotment figures, the cut to Houston County’s CPA for 2009 will be $119,806, or $446,000 less than anticipated and $243,243 for 2010, which is about $750,000 less than had been feared.
“That is very good news for the county, but until we find out how much the cuts to human services and nursing services will be, we really don’t know where we stand,” county Financial Director Casey Bradley said.
Bradley said he has heard the state may be imposing a tax levy limit of somewhere between 1 and 1.5 percent, which would be a huge impact on the amount of revenue the county will be able to raise next year.
“Right now it’s too early to say how the governor’s cuts will impact us. The reductions in CPA cuts helps, but we’ll have to look at everything before we really know,” Bradley added.
State cuts will result in
employee layoffs
Pawlenty indicated the state agency cuts will result in state employee layoffs, but did not offer a number.
Included in his proposal is a $1.8 billion K-12 payment shift to school districts.
Other Pawlenty budget actions include changing an income tax reciprocity agreement with the State of Minnesota to speed up Wisconsin’s payments to the state — an extra $106 million over the next two years should be captured, according to the administration.
In another cost-saving move the governor proposed eliminating political contribution refunds for two years, capturing about $10 million.
Pawlenty also proposed to reduce the so-called “windfall” renter’s refund credit — raises taxes, claim DFLers — to save $51 million.
Reflects 3.8% reduction
The unallotment reflects about a 3.8 percent reduction overall to the state budget, Pawlenty claims.
“The overall impact of these reductions will be to have state government live on about 96 or 97 percent of what it’s living on right now,” he said.
The administration received more than 3,000 suggestions from the public over the past weeks relating to the budget, said the governor.
You can contact Charlie Warner at
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