Tuesday, December 8, 2009

Cities get reprieve from additional December aid cuts...but what next?
In a letter sent to the League of Minnesota Cities earlier today, Governor Tim Pawlenty announced that he will not use unallotment to further reduce or delay December local government aid (LGA) and market value homestead credit (MVHC) payments scheduled for cities and counties.

The decision followed a meeting last Friday at the League offices where representatives from the League and other city organizations met with Department of Revenue Commissioner Ward Einess to express concern about the state budget deficit and the status of the Governor’s response.

This is indeed good news for cities that have had aid and credit payments cut twice, already, in the past 12 months. As noted many times in this blog, city councils in the state have responded to these cuts by making their own cuts to city service budgets – particularly in public safety (police and fire), public works (streets and sewers), and parks and recreation departments. But, unless there is sudden and dramatic improvement in the state’s economy, more city service cuts could be on the way. And, more city personnel could lose jobs.

In the letter received today, the Governor made clear that the state is still facing a serious $1.2 billion projected budget deficit that will require significant remedial action by the 2010 legislature. He also warned that 2010 aid and credit payments to cities could yet be additionally reduced to address the deficit, but he indicated that he would work with legislative leaders to develop a response to the projected deficit.

There is no quick or easy answer to solving our state’s budget crisis. But cities have been called upon time-and-time again to bear a disproportionate contribution to the solution. The 2010 Legislative Session looms as an important one for the future of funding city services in our state.