Local leaders expressed their concerns Thursday about Gov.

Friday, January 11, 2002

Local leaders expressed their concerns Thursday about Gov. Jesse Ventura’s $700 million budget cut proposal.

The plan includes a $91 million reduction of Local Government Aid during fiscal year 2002 and 2003.

State aid represents on average 17 percent of city revenues and 6 percent of county revenues, according to the Department of Finance.

Local Government Aid (LGA) to cities in fiscal year 2003 would be cut by $74 million, and Homestead and Agricultural Credit Aid (HACA) to counties by $30 million, under Ventura’s plan.

The department said, &uot;While difficult, reductions to general support aid provides local governments with the greatest flexibility on how to best adjust their spending and taxing decision making process.&uot; Gov. Ventura suggested local governments make up the reduction by using reserves for a short-term solution.

The appropriation of the cut to each city and county would be based on levy and aid growth, and the exact amount Albert Lea and Freeborn County would lose is still unknown. But local officials complained the plan would affect their fiscal integrity significantly due to the fact that rural governments depend more on the state aid than those in urban areas.

Ventura’s proposal also includes a $17 million reduction in fiscal year 2002 and $82 million in fiscal year 2003 for education. A subsidy for ethanol production would be cut by 10 percent, too. A current 20-cent per gallon subsidy from the Department of Agriculture would be reduced to 18 cents.

County Board Chairman Dave Mullenbach said he is concerned the state aid cut would affect the county’s bond rating. The county would need a millions of dollars in bonding for new courthouse and law enforcement center, possibly this year.

According to Mullenbach, the county has about $17 million in its reserve fund. But only an undesignated $2 million is available for making up the cut.

&uot;The reserve amount is important for rating the bonds the county would issue,&uot; Mullenbach said. Gov. Ventura said he would maintain the AAA rating for the state bonds. But it would damage our rating.&uot;

Mayor Bob Haukoos said, &uot;We need to use the reserve for our cash flow. State aid amounts to about 50 percent of the city’s budget, and the cut will impose a tremendous impact.&uot;

Rep. Dan Dorman (R-Albert Lea) feels the proposal is unfair for rural communities.

&uot;The cut in LGA and HACA will impact some cities and counties than others. That is a big part of the budget for a city like Albert Lea. Some big cities in the state don’t get any aid, so there is no impact. My biggest concern is the cut will disproportionately affect different groups,&uot; he said.

Dorman also disagreed with the governor pointing out the cut would not cause higher property taxes. &uot;The majority of what the governor is trying to do will lead our property tax for the citizens in Albert Lea to be raised.&uot;

&uot;I have not seen all the details of the proposal, but it looks like we did not go after some of the duplicative services and efficiencies that the state government can make,&uot; he added.

Sen. Grace Schwab (R-Albert Lea) agrees with Dorman’s opinion, saying, &uot;I don’t think rural Minnesota is treated fairly in this budget reduction package.&uot;

In addition to the state aid cut for the city and county, Schwab expressed her concern about the school funding and ethanol subsidy.

&uot;A majority of schools that receive an equity aid from the state is in rural Minnesota. We will be disproportionately affected by the cut here. The same thing can be said about the ethanol payment. It will very much impact our farm families.