Herald Journal - Enterprise Dispatch - Delano Herald Journal
Delano feels state deficit pinch

December 29, 2008

Delano’s aid for 2008 was cut by $86,789

By Starrla Cray
Staff Writer

“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 Delano, this translates to $86,789 less in funding.

“Collectively, we were expecting about $106,000, and we’ll end up with about $20,000,” Phil Kern, Delano city administrator, said.

“We obviously can’t change it,” Kern said. “The really hard part is that it comes Dec. 26. We have no time left this year to affect our expenditures.”

Although Delano was certified for an LGA amount of $59,759, the city received $0 for that type of aid. The $20,214 that Delano is getting from the state is the MVHC payment.

“We already feel we’re pretty thin and slim,” Kern said. “We all need to figure out how to make do.”

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 New Germany, with a population of 366, did not have its 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.

“We did everything we could to save our LGA,” Waverly acting mayor Ken Antil said. “It’s not to our liking, but I don’t think we can do anything about it. This is going to be a lean year.”

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.

The League of Minnesota Cities fact sheet stated that because the state has few available resources in reserve, state aid reductions for 2009 will likely be even higher.

Charlie Nelson, current mayor of Montrose, however, remains optimistic. “I trust the state to take care of their problems,” he said. “I think things are going to start looking up.”

“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.

“The state should quit telling people they can do more with less, because they cannot,” Nelson commented. “There’s a limit on how much you can tax people, especially in these tough economic times.”

“The sky’s not going to fall, but it’s certainly going to make it tough to have a balanced budget,” Kern added.


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