Committees ready to cut aid to local governments

The tax committees in the Minnesota House and Senate are poised to cut $105 million in state spending -- which is less than half the amount recommended by Gov. Tim Pawlenty.

The reductions come from three sources -- county program aid, local government aid and the market-value homestead credit. Gov. Pawlenty is proposing to cut $250 million from the same areas.

Senate Tax Committee chairman Tom Bakk, DFL-Cook, says the legislative plan would give cities and counties some additional levy authority to get back part of the funding through local property tax increases.

"It's going to make life more difficult for our local units of government," said Bakk. "But there really shouldn't be any impact on the taxpayer unless local governments make a decision next year, a year from now, to levy back some of the lost aid that they're going to see."

DFL leaders are trying to solve a nearly $1 billion state budget deficit in three phases. The first phase includes the tax bill, along with $208 million in spending reductions from eight smaller budget categories.