The state has a shortfall, but is it local government that feels the pain?

The state's $1.2 billion budget deficit likely means cuts are coming, and that has county, city and other municipal officials worried about how much of the state's loss they will be forced to absorb.

Last year, when state government cut aid to municipalities, Aitkin County let workers go in the sheriff's department and in the health and human services division, according to Gord Prickett, chairman of the county's planning commission. Waseca County Commissioner Rick Morris said his county escaped 2009 without layoffs by not filling vacancies.

"It looks like we'll have to add other alternatives to our list of options," said Morris.

He and Prickett are sources in MPR's Public Insight Network who responded to questions about the effects of the state budget deficit on government programs and services.

An MPR analysis of job numbers gave a more nuanced picture of what's happening. State Department of Employment and Economic Development (DEED) job figures from 2001 to 2009 show the local municipal workforce fell by 2,200 jobs or about 1 percent. Meantime, state government jobs increased 10,100 or 11.5 percent.

At first blush, the numbers suggest the state workers have been less affected by budget cuts than those employed by local government. But there are mitigating factors to consider, said Steve Hine, labor market analyst at DEED. State numbers include figures from the University of Minnesota and the Minnesota State Colleges and University system. In 2009, about 59,100 out of the 97,900 state jobs were in higher education. And higher education jobs rose by 15 percent from 2001 to 2009. The rest of the state workforce grew at 6.4 percent.

On the local level, Hine says 6,000 jobs were lost in the health and human services sector due, in large measure, to reclassification of jobs at the Hennepin County Medical Center. That's because in late 2006 the hospital went from county-owned to a county subsidiary run by a non profit. The job numbers were taken out of the local government numbers, but the jobs were not lost.

"You can dig into these numbers and see deeper reasons for jumps and dips," Hine said.

Even so, government officials in the Public Insight Network said they will have to look beyond job cuts and consider raising revenue if the state pulls back on local government assistance to balance its budget.

In Aitkin County, Prickett says, the planning and zoning department already has raised permit fees "two and three times," to cover department expenses.

I looked at revenue data from the state's office of Management and Budget and, after adjusting for inflation, found that county, city and townships saw a 14 percent cut in state aid from 2001 to 2008. During the same time period, they increased property taxes 11 percent and other taxes and fees 13.5 percent.

But it's also interesting to note that during the same time period, state aid to local school districts rose 33 percent, when inflation is factored in. Meanwhile property tax revenue raised by local schools dropped 17 percent.

Finally, some counties have to delay or scrap projects to save money. Brent Olson, a Big Stone County commissioner, says they'll scrutinize economic development and road projects, "simply because those are the sort of things that can be delayed."

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