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Dassel and Cokato feel the state's deficit pinch

December 29, 2008

By Starrla Cray
Staff Writer

DASSEL-COKATO, MN – “Belt tightening” is a common phrase on the lips of area city officials after Gov. Pawlenty’s Dec. 19 announcement that many Minnesota cities will receive less government aid than originally expected.

To help with the state’s short-term deficit of $426 million, the Dec. 26 payment of 2008 local government aid (LGA) and market value homestead credit (MVHC) was reduced by a total of $66,009,930.

For the city of Cokato, this translates to $57,192 less in funding.

“I didn’t think it was going to be this much,” Cokato City Council Member Forrest “Butch” Amundsen said. “But it could have been a lot worse.”

Dassel City Administrator Myles McGrath said the state should have had better budget planning. “They should have reacted sooner to give us some warning,” he said. “It forces us to be reactive rather than proactive.”

Dassel’s cut of $33,332 is not “debilitating,” McGrath said, but it’s not pocket change, either.

“It could have been bigger, but it’s still quite a bit of loss,” he said.

Incoming mayor Mike Scanlon said, “Dassel is in pretty good shape. Right now, we can deal with it without any problems.”

According to the League of Minnesota Cities, “the cut represents roughly 4 percent of city ‘revenue base,’ which is 2008 certified levy plus certified 2008 LGA plus taconite aids.”

Cuts are first taken from LGA, and if more is needed, it is taken from the MVHC reimbursement.

The rest of the short-term deficit will be covered with the state’s $155 reserve fund, a $40 million reduction in state agency appropriations, and unallotments from counties ($44 million), health and human service programs ($73 million), the University of Minnesota ($20 million), Minnesota State Colleges and Universities ($20 million), state agencies ($40 million), Minnesota Housing Finance Agency ($4 million), and the 21st century mineral fund ($1.5 million).

Cities with populations under 1,000 are exempt from the cuts, which means that Kingston and Darwin did not have their LGA reduced.

Waverly’s population, however, is 1,028. Because they have more than 1,000 people, their unallotment was $35,197.

“What a shame,” Montrose Mayor Charlie Nelson said. “That’s really costing them. Theirs is a unique situation.”

“We kind of questioned that population estimate,” Deb Ryks, Waverly city clerk said.

Although this year will be a struggle for many cities, future cuts are of primary concern. Minnesota has a projected long-term deficit of $4.8 billion for 2010 and 2011.

“I’m afraid there’s going to be some major things happening,” Amundsen said. “In the city of Cokato, we’re going to be very cautious of where the money goes. It could be a little tight next year.”

“The whole state revenue system is going to have to be modified for this not to happen again,” Kelly Hinnenkamp, Howard Lake city administrator, said.

“I have seen this before with the state,” McGrath said. “I don’t agree with their methodology. They don’t plan very well. We’re 95 percent through our budget year before they tell us.”

In 2009, cuts could be “four or five times as bad as 2008,” he said.

“It’s pretty much bare-bones type of government for now,” Amundsen said. “I don’t think the state had any choice in doing it,” he added. “They got caught in this economic downturn themselves.”

“I wish it didn’t have to happen,” Scanlon said. “But you can’t bury your head in the sand and pretend it’s not there.”

Unfortunately, Amundsen said, “we don’t all have money trees in our backyard.”


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