City faces $1 million cut over 2 years

Albert Lea officials brace for reduction in services

By Sarah Stultz | Albert Lea Tribune

Published Wednesday, June 17, 2009

Albert Lea will see a $337,500 cut to local government aid in 2009 and a $778,700 cut in 2010, under Minnesota Gov. Tim Pawlenty’s proposed unallotments announced Tuesday.

Though these numbers are lower than Pawlenty’s original LGA proposed cuts in January, city leaders say the cuts will still mean reduced city services and probably employees.

“There’s no way we are going to balance our budget without reducing services,” said Albert Lea Finance Director Rhonda Moen.

She noted she fully expected the governor to hold firm to his January proposal of a $500,000 cut for 2009 and a more than $1 million cut for 2010 for the city. However, she would not be surprised if Pawlenty came back later and made additional cuts.

Albert Lea Mayor Mike Murtaugh said he thinks the city is well-positioned to manage the reductions after taking significant citizen input about the budget in March and April.

While the unallotment plan is less than Pawlenty’s January proposal, it is still more than what the Minnesota House or Senate plans would have cut, Murtaugh said. These cuts come on the heels of a $400,000 unallotment to the city in the last two weeks of 2008.

Albert Lea City Manager Victoria Simonsen said now that city staff have Pawlenty’s numbers they will start the formal budgeting process for 2010.

Simonsen said she has provided all of the different department heads with the amount they need to reduce from their budgets. The department heads will turn in their preliminary budgets by July 10, and then she will start meeting with them individually the following week. A pretty firm budget will be in place by the end of August.

The city manager said the cuts this year will be covered fairly well with the different programs the city has started to implement, such as early retirement and other one-time revenue sources.

But these are not sustainable cuts, she said. On top of all of the cuts, the city is also anticipating less revenue this year. The number of unpaid assessments are up, and property tax payments are not coming in at 100 percent.

Plus, negotiations are just beginning with the different unions, and it is unclear what changes there will be in health care costs.

“All of those things have to be factored in,” Simonsen said.

During his announcement Tuesday, Pawlenty said Minnesotans and people all across the country have faced the economic crisis by tightening their belts, and the state of Minnesota should do the same.

“As families are living within their means, government should do the same,” Pawlenty said.

The governor emphasized during the Tuesday press conference that the unallotments were just proposals — that they still have to go before the state Legislative Advisory Commission and that additional input and reaction could be received. However, they do cover the $2.7 billion budget shortfall facing the state.

He acknowledged that additional pressure will be put on government agencies because of the unallotments and noted that there would be layoffs as a result, but he didn’t want to estimate on the number of those layoffs.

Freeborn County Administrator John Kluever said he had not received the exact unallotment figures yet for the county, but the cuts weren’t anything unexpected.

“The department heads and elected officials have been very diligent in making recommended cuts,” Kluever said. “I think we’re in a pretty good position to react.”

The unallotments will be just one piece of information for the Freeborn County commissioners to take into consideration when approaching future budgeting, he said.

Pawlenty said counties will be capped at no more than a 1.19 percent cut in revenue for the first year of the biennium. The second year will be capped at a 2.41 percent cut in revenue. He defined revenue as aid plus levy.

District 27A Rep. Robin Brown said Freeborn County will see a $226,000 cut to aid in 2009 and a $450,000 cut to aid in 2010.

Under the governor’s unallotment proposals there will be a total of $300 million in aid cut to cities, counties and townships across the state.

This was the highest group of unallotments, followed next by state health and welfare, which will take a $236 million trim in human services spending and the end to the state’s General Assistance Medical Care program on March 1, 2010.

He also announced he will defer state aid to K-12 schools by $1.8 billion in fiscal year 2010, though schools will get their full aid entitlement in the second half of the fiscal year.

State higher education funding will be cut by $100 million, and state agencies will have to cut $33 million from their budgets.

Brown said one of her biggest concerns with the governor’s unallotment proposals was that Pawlenty made it seem as if he was only making a 4 percent cut to the different areas where cuts were made. But these cuts are really in addition to the cuts already made during the Legislative session. Adding those on, the total cuts are really closer to 10 percent.

“I still would have been much happier had he signed the balanced budget that we sent him,” she said.

She noted Pawlenty heavily went after LGA and health care, which are the two main areas he had talked about reducing beforehand.

“We should not be surprised that’s what he did,” Brown said.

Look to future issues of the Tribune for more information about local school and hospital unallotments.

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