Minnesota cities deal with state aid cuts

Cities across Minnesota are bracing for budget challenges. Gov. Tim Pawlenty's proposed plan to unilaterally balance the state budget cuts $192 million dollars in state aid to cities over two years.

Critics of the plan say some cities will be forced to cut jobs, offer fewer public services and raise property taxes.

In dollars and cents, the impact is huge. But while it may seem odd, city leaders are breathing a sigh of relief because it could have been worse.

"It's the good news, bad news kind of situation. I kind of feel like I've been maybe shot twice instead of three times," said John Chattin, city manager in Bemidji.

"It's the good news, bad news kind of situation. I kind of feel like I've been maybe shot twice instead of three times."

Chattin says based on the governor's proposal in January, Bemidji expected to lose $1 million but they found out the actual loss is about $700,000.

Expecting the worst, Bemidji leaders began making cuts months ago.

They zeroed out employee benefit and pay increases, held back on replacing some equipment, eliminated temporary positions and cut a couple of full time positions through reorganization and attrition.

They also cut back on overtime hours which means potholes may not get fixed as quickly and this winter roads may not get plowed as often.

Chattin says those changes will cover the governor's cut in state aid but it's still unclear whether Bemidji leaders will have to raise property taxes next year. Even with the belt-tightening, the city expects a $100,000 deficit in next year's budget.

The whole idea behind the state's local government aid program is to help less-wealthy communities provide public services. Chattin says the governor's cuts make that more difficult.

"Local government aid is the great equalizer in this state and it's something that a community like Bemidji relies upon," he said. "We're not Edina, we're not Minnetonka. We don't have that kind of tax base or the personal incomes that can support the types of taxes that we would need without LGA."

In the town of Fergus Falls southwest of Bemidji, the story is the same.

Both cities will lose roughly five percent of their municipal budget from the governor's cut. State aid to Fergus Falls drops by more than $900,000 dollars.

City leaders in Fergus Falls have already made the cuts they need to meet the challenge. They cut back on vehicle replacement, supplies, and staff training and travel.

City Administrator Mark Sievert says there will be cutbacks in road repairs and city park maintenance this summer. But outside of that, most people in Fergus Falls won't even notice the difference.

"You keep trying to stress to the public that this is pretty dramatic for us to lose this money, yet they look at it and go, 'Well, I didn't see much of a change,'" Sievert said. "For us it's more of an issue of, how long can we sustain this before it starts to really become evident to the public."

Sustaining those cuts may mean tax increases. Fergus Falls officials will begin discussing that unpleasant prospect next week.

The same thing will happen in the southwest Minnesota town of Worthington, where the governor's proposal cuts nearly $630,000 dollars over two years.

Mayor Al Oberloh says two police officers have already been put on notice their jobs may be eliminated. The city is also considering pulling two other officers off a regional drug and gang task force.

Oberloh says Worthington's streets and parks will likely suffer, and the city may have to shut down its municipal golf course.

The mayor is critical of Gov. Tim Pawlenty's budget approach. He says the state aid cuts will widen the gap between wealthy and poorer communities.

"He made the statement that there's no way he's going to raise taxes under his watch," Oberloh said. "But for us to provide the same level of services to the people that live here... we will have to have property tax increases in this community to come anywhere near keeping the same level of services."

Gov. Pawlenty says cities should be able to handle the aid reductions without making cuts in priority areas like public safety.

More than half of Minnesota communities -- those with populations under 1,000 -- are exempt from the cuts.

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