Cities, counties feeling the pinch
State cuts have left area cities, counties trying to make up for money they counted on - and more cuts that might be on the way.By Deb Gau and
State budget cuts made in late December have cost area cities and counties at least $900,000 in local government aid money that local governments counted on for 2008 expenses. Local governments may have already spent the lost LGA money as an expected part of 2008 budgets.
The LGA money may also be needed to pay for essential services in the first part of 2009.
And while local governments must deal with 2008 cuts, they must also anticipate cuts in 2009, government officials said.
It's not just a matter of making deeper reductions in city expenses, Tracy City Administrator Audrey Koopman said Thursday.
"We already dug deep in 2003," Koopman said. The city can't dig much deeper without losing city services or staff.
Marshall also had a sizeable loss of $278,000. In a Dec. 23 story in the Independent, city administrator Ben Martig said the city would be using reserves to cover the loss.
Counties are in the same position, said Yellow Medicine County Administrator Ryan Krosch.
Yellow Medicine County has already seen the impact of losing funding from the state with an un-allotment of more then $120,000 for 2008, Krosch said.
"We had an un-allotment of $127,000 in December and we'll use reserves to cover that amount. This is money we already have budgeted to cover expenses," said Krosch. "If it's cut during the year we are going to have to find a way to come up with that money, if it's going into reserves or cuts in spending this year and moving forward too.
"We have it in our budgets already but we have no idea what the end result is going to be," he added.
Yet, Krosch said, "There hasn't been much fluctuation in (our LGA) over the last few years. Cities have really been impacted more,"
The cuts made by Gov. Tim Pawlenty to help cover about a $480 million short-term deficit were "un-allotments" of state aid funds that were already locked in place in city and county budgets. All area counties, and cities with a population greater than a thousand - including Marshall, Minneota, Cottonwood, Tracy, Tyler, Canby and Granite Falls - are stuck having to work through the cuts.
At the same time, they're preparing for possible local government aid cuts in 2009. Those cuts could affect even cities without unallotments, and no one knows yet how big they'll be.
Tracy was one of the towns in Lyon County hardest hit by the 2008 cuts, with a loss of more than $72,000.
"We are pretty much covered, not 100 percent," Koopman said, partly through reducing cash flow.
Lyon County had its own big loss.
Lyon County Administrator Loren Stomberg said Wednesday that the county was un-allotted $206,000 in county program aid, but he didn't think it would have a profound effect on the 2008 budget.
"We were anticipating this," Stomberg said, so the county did have a little time to try to cut spending. The county highway department made changes to its planned road projects, and some capital equipment purchases were postponed.
"We expect to be pretty close to the budget, even with the cuts," Stomberg said.
In Redwood County, LGA cuts for 2008 totaled $167,849, said Redwood County Administrator Vicki Knobloch.
"For this part, we're going to be able to absorb out of some of our fund balances - that's what we're gonna have to do," Knobloch said.
"It's bad because your hands are tied. You don't know where to turn," Knobloch said. However, she said it was important not to panic.
Murray County auditor treasurer Heidi Winter said the county lost $92,441 in LGA for 2008. There's not much left to do, Winter said, but tighten budgets and make careful use of reserve funds.
"We're fortunate, we have a very healthy reserve. We had a county board who have been very financially responsible," Winter said. County department heads did "a fantastic job" in trying to keep their own budgets down, she said. The county also receives some revenue from wind energy production taxes.
Local government aid does count for a significant part of some city budget revenues.
"We lost $50,000 for 2008," said Canby city administrator Diane Miller. "Local government aid is 50 percent of my budget. We were at the Jan. 6, council meeting and we sat down and we looked at where we have extra funds."
An article in the Advocate Tribune listed the city of Granite Falls' LGA cuts at more than $70,000.
In Minneota, un-allotted funds came to $34,582, said city administrator Dan Canton.
"We would have gotten that at the very end of the year," Canton said, but the funds would have been used to help cover city expenses until June 2009. The Minneota City Council has formed a budget committee to look over ways to deal with the cuts.
Cottonwood City Administrator Greg Isaackson said the city lost $27,753 from the LGA cuts. To help make do without the aid funds, Isaackson said the city is cutting operating expenses 10 percent across the board, reducing overtime pay and capital outlay expenses.
"We really don't want to touch our reserves," Isaackson said.
Lincoln County auditor Kathy Schruers said the state cut $75,680 out of its 2008 aid.
Schruers said the Lincoln County Commissioners have not taken action on how to cover the cuts or talked about its impact on the county's budget.
Tyler city administrator Tim Ibisch said Tyler lost $24,000 in the December cuts, giving a preview of what could happen in 2009.
Ibisch said the state's limits on LGA cuts for cities with a population of under 1,000 didn't help Tyler which has a population of about 1,200.
While counties and cities are finding ways to cope with the 2008 LGA cut, it's 2009 that also has them worried.
"The bigger concern is what will happen in 2009," Koopman said.
Koopman said she and city department heads are working to revise their 2009 budgets to present to the Tracy city council for approval. The target goal for budget reductions in each department is 10 percent, she said.
"We're planning for (LGA) reductions," Koopman said. "We cannot continue with business as usual . . . We will still deliver the basic services, perhaps not to the degree people are accustomed to."
"I expect there might be further reductions" in 2009, Canton said.
When that happens, Minneota will have to look at reevaluating the budget.
"When your budget is approved, it doesn't mean you immediately go and make the expenditures," he said. There still might be some wiggle room.
"Every city's in the same boat," he said.
Miller said the Canby council is looking at cutting an additional 15 percent to brace for future cuts in LGA.
"I sent a memo out to staff to tell them about the directive and I told them we would be looking at possible layoffs and hours cut," said Miller.
Miller said the city is no longer looking at purchasing some equipment it had originally budgeted for, including a snow plow.
Ibisch said the Tyler council is looking at ways to cut back on costs as much as possible, including putting possible projects on hold.
Isaackson said the hope for Cottonwood is that cuts now make 2009 easier.
"This is a start," he said. "It's just a matter of knowing something's coming, and its more severe than we're used to."
While Murray County has made sound decisions with building reserves in the past, Winter said, none of that is a guarantee of financial success in 2009.
"We're just like other counties in the area, in that we can't stretch staff any further than we're already stretched," Winter said. Compounding the budget challenge for Murray County is a 3.9 percent county levy limit. "We don't know what to expect. That's the hard part."
Lyon County too, will be able to handle the 2008 cuts, however, Stomberg said, "For 2009, we don't know what's going to happen."
Lyon County had $1.3 million in state aid certified for 2009, Stomberg said, but at this point it's not clear how much of that the county will actually get.
In the meantime, the county board has approved some cost-saving measures along with the 2009 budget, including a salary freeze. Stomberg said the county currently has about $3 million in reserve funds. However, that's not enough to keep the county running.
Counties did get a heads up on the possibility of cuts in LGA, Krosch said.
During the annual Association of Minnesota Counties conference late last year, Krosch said counties were warned to expect drastic cuts in LGA.
Krosch said Yellow Medicine County recently met with state representatives that were more cautions about talking total cuts.
"At the AMC conference they presented it as plan for the worst case scenario of not getting anything," said Krosch. "I don't think that is going to happen.
"When we had Sen. Gary Kubly (DFL-Granite Falls), he said that we wouldn't lose all of our aid," he added.
Knobloch said getting through tight financial times will require creativity. In addition to a salary freeze and budget cuts, Redwood County is looking at collaborating with its neighbors for services.
"We're going to have to think outside the box," Knobloch said.
Stomberg said he is waiting to hear state budget forecasts in January, February and March before making any major revisions to the Lyon County budget.
"Perhaps we'll have kind of an idea how to adjust the budget for 2009," Stomberg said. Depending on how big of an adjustment that is, "We'll have to make some big decisions."
If local government has to cut back on its services, Koopman said, it may mean the people will need to step forward and lend a hand.
"I hope people can make a cooperative effort," she said.
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rona45
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01-09-09 10:04 AM
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Well this country has been know for helping out the less fortunate. Trouble is that in doing so we have not been thinking of the future.. We have created professional beggers instead of teaching and encouraging the less fortunate to be responsible for themselves.
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Chesterp
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01-09-09 6:18 AM
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Folks you're now experiencing just how painfully important it is when you vote for those who take (tax)from the working class and so easily give to the un-deserving. Everyone suffers and it's only the beginning.
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