Wednesday, May 20, 2009

At session's end, city aid cuts remain unresolved
(analysis by Gary Carlson, Intergovernmental Relations Director for the League of Minnesota Cities)
The 2009 State Legislative session ended at midnight Monday without Governor Pawlenty and legislators reaching agreement on how to balance the remaining $2.7 billion state budget deficit. The Legislature approved and sent a package of budget-balancing tax items to the Governor but immediately after the session adjourned, the Governor’s staff indicated that the bill would be vetoed, which will presumably trigger the unallotment scenario threatened by the Governor last Thursday.

At this point, we do not yet know how deep the unallotment reductions might be. In the last hours of the session, Governor Pawlenty offered budget proposals that would have severely reduced “tax aids and credits” by roughly $450 million. This total is similar to the budget cuts proposed by the Governor in his January budget, which included a 2009 LGA/MVHC reduction of $100 million and a 2010 reduction of roughly $182 million. Estimates of the Governor’s January proposal and the original House and Senate proposals are available on the League of Minnesota Cities website at: http://www.lmc.org/media/document/1/house_lgacuts_march31.pdf [see columns titled “Governor LGA Cut” and “Governor MVHC Cut” for 2009 and 2010 estimates].

Please keep in mind that these are not final unallotment estimates. The final amounts will almost certainly change and will be dependent upon the allocation of the necessary budget-balancing cuts and the ability to shift school revenues.