Pleased cities prep for cuts anyway

[image]

Annandale City Administrator Mark Casey

City administrators across the state were pleasantly surprised when Gov. Mark Dayton announced today that he wants to maintain current levels of Local Government Aid (LGA) and another form of state funding called Market Value Tax Credit (MVTC) reimbursement.

Still, cities, which have learned to do with less thanks to past aid cuts, are wary. Dayton's budget runs contrary to a proposal put forth several weeks ago by the GOP-controlled Legislature, which would have slashed LGA by $300 million over the next two years. The governor vetoed the proposal, arguing that cutting state aid to cities results in increased property taxes.

Most expect a compromise.

"The Legislature has a part in the resolution too," says Albert Lea's interim city manager Patrick McGarvey. "As I told my staff this morning, to take a football field as an example, the goal posts have been set. Gov. Dayton is at one end of the field and the Republican caucus is at the other."

McGarvey's staff "is starting to work on 'what if,'" he says. "If the governor's position prevails 100 percent, we're set with the budget we have for this year. And, conceivably, it wouldn't be a rough 2012." Albert Lea's budget includes its full LGA allotment of more than $5 million, amounting to a third of total expenditures. "We haven't set aside any specific deletions at this point," says McGarvey. "We've already made deletions in previous years and it's time to draw the line."

Shawn Gillen, city administrator for Grand Rapids, has worked to wean the city from reliance on LGA funding, which he considers unreliable. "We're still going to plan on losing it," he says. Grand Rapids is scheduled to receive about $1.3 million in LGA, and would have lost around $450,000 under the legislature's proposed budget. "It would be great if it didn't get cut. We'd use it to pay down our debt or buy capital items," like a second new dump truck.

In Annandale, a city of around 3,000 people, LGA funding of $376,000 per year amounts to 14 percent of the budget. "We could sustain that hit," says City Administrator Mark Casey, though it wouldn't be easy. "We've already lost an officer. That's 20 percent of our workforce."

"I think a city would be naïve to think they are not going to get a cut," says Casey. "To what level that is, it's tough to say. We've been planning for somewhere between 0 and 100 percent."

Comments from Republican lawmakers following Dayton's budget address seem to bear out the skepticism of city leaders. Rep. Greg Davids of Preston, chairman of the House tax committee, said local governments ought to be tapping into their rainy-day funds, "because it's raining."

"Cities need to be able to plan," he said. "Now they're feeling good -- 'Oh look, the government's going to get this.' Well, you're not gonna get that. It's not gonna happen."

• Annandale watches special session for broadband help
• DNR pushes ahead with its groundwater planning
• Broadband providers seek $44 million from state fund
• Shifting rain could be lowering groundwater