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Home | Politically Connected | State Politics

Cuts to city, county aid coming fast

Significant reductions in Local Government Aid and other aid programs are likely to come quickly, Pawlenty and top legislators said as they look for items to make up a total shortfall of $5.2 billion.

By MARK BRUNSWICK, Star Tribune

Last update: December 9, 2008 - 10:55 PM

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Minnesota's city and county governments are going to be hit hard by projected state budget deficits -- and the pain could be felt sooner rather than later.

Gov. Tim Pawlenty and legislative leaders said Tuesday that aid to cities and counties is likely be one of the first items on the chopping block as the state struggles first with a short-term $426 million budget deficit for the budget period that ends next summer and then with a looming $4.8 billion projected deficit for the two years beginning July 1.

Asked Tuesday whether there was any way cities and counties would be spared from the cuts, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, was short and definitive: "No," he said.

Pawlenty, a Republican, said it is too early to outline how the cuts might be made to the cities and counties but strongly suggested that they should brace for significant reductions and that the cuts could come quickly. "We would expect the cities and the counties to be part of the solution here," he said.

Local Government Aid (LGA) is provided to cities as a way to equalize property taxes. Cities use it to fund everything from cops on the street to street repairs. Cities eligible to receive the aid get payments from the state twice a year, with the second payment due Dec. 15.

The aid to cities and counties is part of the property tax aids and credits (along with aid to homeowners and renters) that make up a little more than 9 percent of the state budget. Later this month the state is scheduled to distribute $242 million in city LGA and counties are scheduled to receive $102 million in county program aid.

Pawlenty is likely to use a process known as unallotment for the short-term budget fix and has been working with legislative leaders to set up a framework for making the cuts, which will probably happen before the legislative session begins on Jan. 6.

He said he has the authority to delay cutting the checks to the cities but will work with legislative leaders to determine what an unallotment of LGA and county aid might look like.

Two tax committees will meet today, and House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said legislative leaders will take recommendations on how to address the cuts. Representatives from as many as 40 Minnesota cities plan on attending the committee hearings today to make their concerns known.

Pawlenty and the legislative leaders also addressed plans for dealing with the larger projected deficit for 2010-11. He reiterated that he would be focusing on making cuts in spending as opposed to raising taxes. While agreeing that cuts would come first, Kelliher said she would not rule out reconfiguring tax policies, including potentially broadening the state's sales tax to include such things as clothing and Internet sales.

Besides a previously announced state hiring freeze, Pawlenty said he has ordered a freeze on performance bonuses and urged local governments and school districts to follow suit. He also suggested that exploring some options on privatizing some state functions such as the lottery and a portion of Minneapolis-St. Paul International Airport should still be considered.

Mark Brunswick • 651-222-1636

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Governor: Tim Pawlenty
One of only a few prominent Republicans to win a competitive re-election contest in the Democratic sweep of 2006, Tim Pawlenty is widely seen as politically shrewd and naturally likable.

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