Dakota County slowdown in hiring becomes a halt

Officials say it's a way to avoid tapping budget reserves and prepare for likely cuts in state aid, which could reach $13 million.

By KATIE HUMPHREY, Star Tribune

Last update: December 16, 2008 - 9:36 PM

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Hiring has gone the way of the weather in Dakota County.

It's frozen.

With the state budget $5.2 billion in the red and the county's $9 million December state aid payment suddenly in question, county staff members told Dakota County commissioners on Tuesday that what had been a "soft freeze" would become a full freeze, at least through January when Gov. Tim Pawlenty presents his proposed budget.

County officials say the idea is to soften the blow, and not dip too far into county budget reserves, in order to best manage likely cuts in state aid to counties in 2009 and beyond.

Based on experience -- mostly the hits the county took during the 2003 state budget crunch -- Dakota County could lose $2.5 to $3 million for every $100 million the state cuts. By that estimate, the county could easily be out $13 million, about a one-fifth of its current state funding per year, starting in 2009.

"This is far worse than 2003, I think, by any measure," Dakota County Administrator Brandt Richardson said. "I'm very concerned, frankly."

In 2008, about $60 million of the county's $252 million operating budget came from the state.

The $9 million December payment, the second of two annual payments the county already included in its 2008 budget, is the first concern. As state officials seek ways to remedy an initial $426 million shortfall by June 2009, trimming the December local government aid payments is one option. Pawlenty could opt to "unallot" the payments before they are due Dec. 26.

In Dakota County, the $9 million payment includes $6 million for state program services, $500,000 for the libraries and $2.5 million for market value homestead credit reimbursement.

The county has about $21 million in a budget stabilization fund that could be used to make up the difference in the short term. But the county would likely cut expenses in 2009 to recoup those reserves, especially in light of the state's projected shortfall through 2011, Dakota County Financial Director Matt Smith said.

Enter the hiring freeze.

As the economy soured, the city slowed hiring over the summer by opting not to fill a percentage of open positions in each department, for a total of 40 to 50 vacancies. Now, positions will not be filled unless they have an urgent effect on public safety or security.

"This is about being prudent and looking ahead and having some options for choices when we need them," Richardson said.

Other than that, county officials say it is too early to tell what county programs or services could be affected by state aid cuts. If the governor does decide to unallot all or part of the December payment, Smith said the county staff will work with commissioners to adjust the budget locally.

"It's all merely speculation at this point in time as to what's actually going to happen," Commissioner Joseph Harris said. "They are creating an economic woe for us because they're finding themselves in an economic woe up at the state."

Katie Humphrey • 952-882-9056

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