Funding spike saved city from budget cuts

Published 12:00 am Friday, July 20, 2001

City Manager Paul Sparks had taken out the red pen and was preparing to slash $600,000 to $1 million from the city’s budget.

Friday, July 20, 2001

City Manager Paul Sparks had taken out the red pen and was preparing to slash $600,000 to $1 million from the city’s budget. He was steeling himself to the task of talking about staff cuts with the city department heads.

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That was a month ago.

Now the red pen is gone and Sparks is preparing a new budget. Instead of cuts, he’s thinking about finally taking care of some long-neglected city projects with funding supplied in the final days of the special legislative session.

&uot;I was concerned, because there’s nothing more difficult than cutting jobs and services to balance the books,&uot; Sparks said. &uot;That was the situation we were in.&uot;

According to Eric Willette, policy research manager for the League of Greater Minnesota Cities, legislators struck a deal with Gov. Jesse Ventura in the final days of the special session. The deal added $140 million in funding to local governments to help them maintain services through the property tax reforms contained in the tax bill. The funding comes from a state program called local government aid, or LGA.

Albert Lea will receive $6.4 million in LGA in 2002, up from $5.2 million in total state assistance for the current year which includes money from the now-eliminated Homestead Agricultural Credit Aid (HACA) program.

Willette said the aim of the last-minute deal was to help smaller cities in the state, especially those in Greater Minnesota, keep up with the wealthier cities in the Metro area while the state takes over the general education levy.

&uot;Cities in Greater Minnesota actually fared very well in terms of local government aid,&uot; Willette said.

&uot;They actually ended up with higher increases than the Metro-area cities.&uot;

Willette said cities in Greater Minnesota saw an average increase of 20.7 percent in LGA compared to 16 percent in the Metro area.

Sparks said that increase saved Albert Lea from some painful budget cuts, especially considering the rise in energy and health care costs.

&uot;We were told early on not to count on any increases in LGA, and we knew they were getting rid of HACA,&uot; Sparks said. &uot;When I heard about the last-minute discussions to increase LGA, I was hopeful we might break even. I never expected to get a raise of $1.2 million.&uot;

One explanation for the raise, said Willette, is that Albert Lea was deemed a &uot;regional center&uot; because it supplies services to non-residents from throughout Freeborn County and the surrounding area.

&uot;That was one of the key adjustments to the LGA formula,&uot; Willette said. &uot;All cities in Greater Minnesota with a population of 10,000 have that designation. It borders on a windfall for some cities.&uot;

Though Sparks is happy about the increase, LGA now represents more than 51 percent of the city’s general fund budget. That’s an uncomfortably high percentage, he said.

&uot;It makes me uneasy because we’re in a position now of being at the mercy of the legislature. Cities in the state have always relied on LGA to a great degree, but the reliance is growing,&uot; Sparks said.

Several city needs can benefit from the LGA raise, Sparks said. The animal shelter needs renovation, and the city may finally be able to build a secure facility to hold seized vehicles. The police may even get that extra squad car.

&uot;Those will probably be my recommendations to the council,&uot; Sparks said. &uot;Instead of cuts, we have a good opportunity to address some of these other concerns.&uot;

Sparks has no prediction for the next session. He doesn’t want to count on any more last-minute raises in LGA.

&uot;We were the winners this time,&uot; he said. &uot;Next time – who knows?&uot;

LGA breakdown for local &uot;regional centers&uot;:


&160;2001 LGA

&160;2001 HACA*

&160;2002 LGA

&160;Albert Lea
















*Phased out by 2001 legislature