Tuesday, February 9, 2010
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More state cuts coming? Maybe, city officials fear
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By CLARE KENNEDY

ckennedy@owatonna.com



OWATONNA—The city of Owatonna may be in for more cuts from above.

In December Gov. Tim Pawlenty may slash even more state aid to cities and counties — at least, that was the buzz going around the League of Minnesota Cities’ annual convention last week. Worse yet, they could be in for more grief in 2012, when the state will likely face another massive deficit.

To solve the state’s multi-billion dollar deficit, the governor has already promised to shear $450,000 from Owatonna’s 2009 allotment of Local Government Aid — tax money collected by the state then re-distributed to cities and counties for vital services.

Initially, city officials were relieved that the number had been somewhat lower than expected. The city had planned for $700,000 in cuts. But now they are starting to wonder if the governor may resort to an 11th hour “unallotment” of LGA if the state gets further in the hole.

“I’m not a prognosticator of gloom and doom, but sometimes that does happen,” said Council Member Les Abraham, who attended the convention on Wednesday.




“They let us know that the horizon is not very bright,” agreed City Administrator Kris Busse. “It’s hard to know what will happen, but they told us to be prepared because this may not be the ceiling; it may be the floor.”

It wouldn’t be the first time that the state has abruptly cut the city’s LGA. After officials discovered short-term $426 million state deficit in December 2008, Pawlenty unalotted $500,000 in LGA headed to Owatonna just one week before the check was due.

Mayor Tom Kuntz said the city would just have to wait and see. Much depends on the 2010 election. Depending on who takes office, there is a possibility that some LGA will be restored, Kuntz said.

But that may be a long shot: The state faces yet another deficit in the next biennium, from 2012 to 2013, said Sen. Tom Bakk, who is hoping to get the DFL endorsement in his bid for the governor’s mansion in 2010.  

“We have a $3.1 billion deficit in the next biennium. That’s a known thing,” Bakk said.

That number could get higher once the state figures in the $1.8 billion in delayed payments to the school system. Gov. Pawlenty used those funds to shore up the state’s current financial crisis, with the promise that the money would eventually be paid back.

“If you take the governor at his word that the future legislature and governor are going to pay the schools then you see the real deficit is not $3.1 billion, but $4.9 billion,” Bakk said.

There is also talk of reviving General Assistance Medical Care (GMAC) once Pawlenty leaves office. In addition to ample LGA cuts, the governor vetoed expenses for GMAC, a long-standing state-funded health program that serves “the poorest of the poor sickest of the sick,” Bakk said. As of now, the program will cease to exist on March 1, 2010.

“If you think that the next legislature should restore that, it costs a little over $400 million a year,” Bakk said, bringing the tally to nearly $5.9 billion.

On top of all that, state accountants predict that with inflation that figure is likely to balloon by another $1.4 billion in 2012.

“So the state’s real deficit for 2012 to 2013  is $7.4 billion,” Bakk said. “It’s really what the 2010 election needs to be about.”

Such staggering figures cast serious doubt on the future of the LGA program, said some city officials.

“That leaves us pennyless,” Abraham said. “LGA was orginally created to equal the playing field for affluent and non-affluent cities. It was not designed to be a way for the state to cover their costs and that’s what it’s being used for. If things come through as they’re forecasting there’s a possibility that LGA will be extinct and that’s not good.”

Mayor Kuntz had a different take on it. 

“I don’t think LGA as it sits today will be the same program. There have been cities weaned off of it and suburbs that don’t use it at all,” Kuntz said. “We need to re-evaluate the use of LGA and as soon as we as cities accept that and move forward the better off we’ll be.”



Clare Kennedy can be reached at 444-2376.
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Member Opinions:
By: atlascollapsed on 6/30/09
And I was just accused of screaming "the sky is falling?" Apparently it's contagious.

By: RichBaby on 6/30/09
Good! The Big Owatonna "Pork" pig is going to lose some more weight.
Where is Owatonna going to get the $$$$$ for the LOOSING money business of the Water Park? OH MY!

By: pax2u on 6/30/09
OH MY...I see that Mr. Medford found his way back to owatonna.com

what is your only goal?...to be the first to post? wow..good job!

By: MNBear on 6/30/09
So, the REAL deficit that is coming (not including the deficit supposedly dealt with this year) is $7.4 billion.

When are our "leaders" going to realize that they need systemic spending cuts and program elimination? Even if your thing is "tax the (so-called) rich," you cannot possibly tax your way out of this mess. Spending has to be cut - now. Even a liberal's brain must see that (or, are you all till too lathered up blaming Bush for everything?).

BTW - I seem to recall a couple of iron-clad economic promises from our CURRENT president that seem to have fallen by the wayside:

1. We had to push the stimulus bill through immediately, without even reading it or knowing what was in it, because people needed jobs. We were promised that unemployment would hit 8% nationally and then, whoosh, all that stimulus money would solve everything. Unemployment is at 9.6%, and the President has had to admit it will easily blow past 10% through NEXT year. Wasn't the stimulus plan supposed to solve everything?
2. We were promised no wasted money in bills - so-called pork. Yet, 9000+ pork items in the last budget.
3. Fiscal discipline? A line-by-line review of the federal budget? Gone. The deficit is going to quadruple within 10 years. Spending as a percentage of our GDP has gone from well under 10% to nearly 15% in one year.
4. No one making under $250k will see their taxes raised one dime. Remember that promise? Well, let's see....the new energy bill will result in energy costs doubling - that's a tax on everyone. The new medical insurance bill will result in employers having to tax your insurance benefits, which they don't do now. That will result in a huge tax increase for everyone, not just the "rich." How about paying for all this spending - where is the money coming from. If you took 100% of everything made over $250k in the country, you wouldn't come close to paying for it. So, the not-so-rich are going to pay as well.
5. What about the "we don't want to run the economy." How's that working for GM? The unions are getting everything they want, but the actual owners (shareholders and bondholders) of GM are getting nothing. That seems fair.

Bottom line - we are on the highway to hell (apologies to one of the greatest rock bands ever), and no one seems to care at all that we're building "aquatic centers" when the bank account is overdrawn.

By: igor74 on 6/30/09
I think it's fittingly ironic that our mayor says that depending on who's elected governor in 2010 that LGA might be restored
(I can just see a Republican governor doing that - not).

Later he says that cities need to re-evaluate LGA and dependence upon it. (Well,DUH. And this coming from someone who said we needed MORE LGA when he was first elected.)

That sounds like the words of an addict who knows he needs to kick the habit but is still craving another score.
But, then again, LGA is nothing but a government welfare drug for cities and counties so this isn't surprising.

The message is clear: if you want to be free to determine your own path you'd better have figured out how to pay for it yourself and not be dependent on others.

The larger question is if LGA would be restored from where will the money come? The state is spending too much and nobody is willing to cut anything. That leaves tax increases and that's guaranteed political suicide at this point and for the foreseeable future. Sounds like a stalemate to me.

A while back I said this economic downturn was going to impact this city in ways they hadn't considered.
It's becoming quite obvious that nobody in charge here ever asked the basic question of what's the impact if LGA went away? Had they done that they might have tempered their spending, budgets, and ambitions accordingly.

Welcome to the day of reckoning.

By: Orwell on 6/30/09
Good job MNBear!

By: TaxPayer on 6/30/09
Ah-h-h-h Change we can believe in . . .

And now we have a B-grade comedian for a US Senator to boot. . .

By: RichBaby on 6/30/09
TaxPayer that was a Great one!!

To all the Obama and "Frankenstien" voters that were Stupidfied by the Infamous "Change....Yes we can" slogan.
There are some new Anti-deppresant, & Anti-anxiety drugs coming to market that may help you in your time of need!!
Hahahahhaahahahha!!!!............There is going to be some damm hard crying in the years to come!! Were going to have to buy stock in the "DEPENDS" company when these voters wake up to reality, if they can get back to reality that is.

By: RichBaby on 6/30/09
Let em raise Property Taxes!!
I've re-arranged my business that I get over half my property taxes back!!
Let it come...Let it come... Cant get "Blood out of a Turnup"!!

By: RichBaby on 6/30/09
PORKY PIG "OWATONNA" IS GOING TO MARKET!!

By: je_ne_sais_pas on 6/30/09
You have commented on more than half of the stories on the OPP. Are you always this negative? It makes me a little sad.

By: RichBaby on 7/1/09
I'll give you a "bunch of sad upside the Head" je_ne_sais_pas!!! What kind of stupid nick is that BS??

Looser!!

By: quinn on 7/1/09
Reality Bites is that you?

By: RichBaby on 7/1/09
I've been called alot of things over the years but, Reality Bites?? Dont remember that one.
Sorry!

 
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