Aid cuts may hit Austin

Published 12:00 am Thursday, December 5, 2002

The numbers are out and they're bigger than expected.

State finance officials released the news Wednesday -- Minnesota's budget deficit amounts to $4.56 billion through the year 2005.

"I was flabbergasted. We've always been talking $3 to $3.2 billion but to get $4.56 billion, it is a big concern," Austin Mayor Bonnie Rietz said.

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Of the $4.56 billion, the new governor will need to take care of approximately $356 million of the biennium budget ending in June 2003. By law, the state cannot finish the year in negative numbers. The remaining balance will be carried for the next fiscal year.

Rietz said she is quite concerned for the state and the city.

The local governmental aid that the state provides is only 4 percent of its budget for Austin, however, the aid amounts to 66 percent of its general fund.

At Tuesday's truth-in-taxation hearing, city finance director Tom Dankert explained in order for governor and the legislature to balance the budget by June, it is likely that they will start looking for areas to cut. Even if the governor wanted to raise taxes, there would not be enough time for sufficient revenue.

Because Gov.-elect Tim Pawlenty, who will take office early January, signed a pledge stating no tax increases during his tenure, there is likelihood for cuts to be made on local government aid.

The forecast and others in early February will not go away, so the city will have to work on balancing, Dankert said at the hearing.

Rietz said the city has been looking at ways of cutting down. But the city will not know until the legislature comes down with a decision and the governor approves it.

Wednesday's forecast is one of two given every year. It reflects how state expenses, taxes and revenues add up. This forecast is then used by the governor to put together the budget for the following fiscal year 2004-05.

A looming concern, Rietz said, is that Gov. Jesse Ventura could decide to defer the check at the end of the year, leaving it on the hands of the new governor. "If he did that, it would affect us immediately."

The governor could also decide to cut the amount of the check. The LGA is handed out twice a year. If the checks given, Austin awaits roughly $3.75 million.

Internally, Dankert and city administrator Pat McGarvey are working on plans for the council if the local funds are cut.

The state will have to deal with it first and so will Austin.

"I can't imagine that it [deficit] won't touch everybody in the whole state," Rietz said.

Roxana Orellana can be reached at 434-2214 or by e-mail at