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City officials urged to get word out on budget

By Tom Larson

Sun Tribune

Civic officials across the state are frustrated with how state financial decisions are affecting local budgeting, and with the seeming lack of public outcry about the potential impact on services and taxes.

Morris city officials expressed those vexations Tuesday during an informational visit by Elizabeth Wefel, of the Coalition of Greater Minnesota Cities during the City Council's regular meeting.

Cities and counties are facing substantial decreases in state funding in coming years, if not the discontinuation of that funding, which for cities comes in the form of Local Government Aid and Market Value Credit.

The state's budget deficit is estimated to be between $5 billion and $8 billion in the next biennium. Cities have already sustained significant reduction in aid and are planning budgets that, in many cases, include reductions in services and even employee layoffs.

City officials are in the lamentable situation of trying to plead their cases to lawmakers who are not hearing the outcry from the public.

"Until the public feels the impact of these decisions, (legislators) think they can cut the hell out of everything -- and they can't," said City Attorney Charles Glasrud.

So far, public officials have largely maintained providing the same levels of service in the face of diminishing resources, Glasrud said, but that it can't continue on that way, especially with more aid reductions likely.

City Manager Blaine Hill said he is offended when, while pleading the city's case to lawmakers, that he hears them say, "we haven't heard from the public."

"We're here, talking to you," Hill said. "We know what this is going to do to the public."

Aid cuts usually trigger increases in property taxes levied to maintain services. Wefel said that contrary to the beliefs of some, Minnesota Department of Finance statistics show that property taxes statewide have increased from about $4 billions in 2002 to almost $7 billion in 2009.

LGA and MVC account for about 3.5 percent of the state's 2010-2011 pre-cut General Fund. But LGA/MVC cuts in the 2010 legislative spending reductions amounted to 8.3 percent. If school funding shifts are not included, LGA/MVC cuts account for almost 17 percent of the 2010 reductions.

It's not inconceivable that cities like Morris -- which derives two-thirds of the General Fund from state aids -- could be contemplating a future that doesn't include LGA. Wefels projected that, without LGA, Morris would need to increase its property tax levy 188 percent to maintain its current level of spending for services.

With the council's approval two weeks ago, Hill and his staff have begun planning a city budget for 2011 using some of these guidelines:

•A "worst-case" plan to eliminate three full-time employees.

•Freezing wages for 2011.

•Reducing the city's General Fund budget by 8 percent.

•Increase the general tax levy by 3 percent.

•Increase utility rates by 3 percent.

•Reduce the city's public library funding by 8 percent.

•Reduce commitments to Community Education, the Stevens County Economic Improvement Commission and the Stevens County History Museum by 8 percent.

•Freeze capital equipment purchases, small equipment purchases and non-essential travel.

•Increase the city's general fee schedule by 5 percent.

The city also expects to estimate 15 percent increases in workers compensation insurance and group health insurance.

On Tuesday, Wefel recommended that city officials embark on a stepped-up campaign of public education about LGA through the media, including information in tax statements, and by clearly communicating the reasons for property tax increases and service cuts.

In other city business:

•The City Council approved a feasibility study for planned improvements on East 8th Street, East 9th Street and Arizona Avenue for 2011.

The council's approval does not green-light the project, which is part of the city's five-year capital improvement plan.

For the last several years, the city has bonded to complete a capital improvement project each year. Last year, work was completed in the Highland Homes Addition, and work has started on the city's 2010 project on East 2nd Street.

But council members have discussed the possibility of postponing capital improvements next year as state and local representatives wrestle with expected budget shortfalls.

It's a difficult dilemma, said Hill: The roadways and infrastructure identified in the improvement plan are in poor shape, and low bond interest and highly competitive bids make this a good time to do the work. But there are too many financial uncertainties to fully commit to -- and bond for -- yearly projects, he said.