Albert Lea will receive about $600,000 less in local government aid than it was certified to receive in 2011, under the new budget approved last week by the governor and Legislature, city officials said this week.

Though cuts to local government aid to cities could have been worse under the budget, Albert Lea City Manager Chad Adams said the city will now have to begin the process of figuring out where the $600,000 will be cut in the local budget. The city had been expecting to receive this money.

The action takes Albert Lea’s LGA from $5.32 million to $4.72 million.

On top of this reduction, Adams said the city’s market value homestead credit is also being reduced by about $360,000. However, because the city budgeted for this anticipated difference in 2011, there will in effect be no extra repercussions related to this decrease felt this year.

The city currently receives about $480,000 from the market value homestead credit.

The real repercussions will come in 2012 when the same LGA and market value homestead credit levels will apply.

Adams said the City Council members will be meeting in August for a retreat to begin talking about budget priorities and ways to handle the loss in state revenue.

He said Thursday that no decisions have yet been made, and all options are on the table.

He is also working to compile information about the status of this year’s city budget, including finding out areas that may have come in under budget.

LGA has been one aspect of the state budget that local chamber, city and economic development officials have strongly fought to support during the last few years.

Earlier this year, the board of directors for the Albert Lea-Freeborn County Chamber of Commerce urged state legislators to honor its commitment to LGA certified for 2011, going against the stance of the Minnesota Chamber of Commerce, of which it is a member.

At that time, Albert Lea-Freeborn County Chamber of Commerce Executive Director Randy Kehr said LGA was designed 40 years ago to level the playing field between metro areas rich in tax base and Greater Minnesota.

The chamber resolution argued that LGA cuts would result in higher property taxes and lower services that would make businesses in Albert Lea even less competitive compared to businesses in suburban cities and in cities in other states.