This is how it is: the state of Minnesota is in deep financial trouble and that means Mower County is, too.

That, in turn, means every citizen in the county also faces trouble. Just ask Garry Ellingson, 5th District Mower County Commissioner and chairman of the county board.

"It will affect everyone before it is through," Ellingson said. "Until the legislature makes a final decision and the governor signs it into law, we're really caught in limbo."

The state budget deficit is that deep -- $356 million this year and $4.2 billion for 2004-2005. Government is that huge and far-reaching.

It creates a variation of an old theme: When the state government sneezes, everybody in Minnesota gets sick.

Over the last several years, counties have, indeed, become extensions of state government. That occurred when counties agreed to provide programs and services for the state. In return, the state shared some of the costs or didn't fund the mandate it created.

Mandates, funded and unfunded, were among the topics last week at a retreat for Mower County officials and staff to assess the situation.

Unallotment hurts

Gov. Tim Pawlenty's original budget-slashing -- called "unallotment" -- saw a total of $142,559 disappear from Mower County.

A water plan grant in the amount of $30,222, Wetlands Conservation Act grant of $12,200, shoreland grant of $3,746, feedlot grant of $59,040, Women Infant Children monies totaling $11,676 and Community Health Services monies totaling $24,685 all disappeared.

Also $988 in Minnesota Pollution Control Agency funds for individual sewage treatment system upgrading were cut.

Pawlenty also has proposed wiping out $326,216 in county aid this year.

The estimates for cuts in Homestead and Agricultural Credit Aid cuts are even worse: $332,000 this year and $582,000 next year.

County governments must decide which programs and services are absolutely essential to citizens.

The partnerships between the state and counties became an uneasy alliance as the list of unfunded mandates grew.

As much as 85 percent of what county governments do is estimated to be the result of state and federal mandates.

Some of those mandates came with funds and some did not.

The only discretionary cuts allowed among the mandated programs and services are libraries, parks and roads.

Counties must decide whether or not to replace state funding with money from county taxes.

The county board of commissioners will rely upon input from two key people: Craig Oscarson and Donna Welsh.

Oscarson is the county coordinator. Welsh is the county's new and first-ever finance director.

Future cuts hurt worse

"The cuts will hurt the elderly and the low-income worst," Oscarson said. "They will have to choose between health care and food. That's how bad it will be if these cuts are made."

Oscarson and Welsh are monitoring the continually developing situation with department heads.

They are planning to inaugurate a regular "report to the commissioners" and schedule press conferences to share the latest developments with the media.

"Keep in mind, it's only a proposal," Oscarson said of Pawlenty's proposed budget. "We really don't know what will happen. That's what we have to try and figure out in order to be prepared."

Pawlenty proposed balancing the budget and meeting a $4.2 billion shortfall, while avoiding increasing taxes, reducing spending to bring it into line with available revenues and all the while providing essential services that are most critical to the state's citizens.

"For instance," Oscarson offered one example, "The state proposes sending prison inmates with six months or less time left on their sentences back to their counties of residence. That would be 13 prisoners sent back to Mower County where we don't have any room in our jail already and where we are now boarding prisoners in Mitchell County.

"So, if they do that, what are we going to do? And that's just one of the worries we have."

Another is the fact that the governor's unallotment decisions are retroactive to Jan. 1, 2003.

"What this means is that one-sixth of money we expected to receive for all those programs, WIC, community health services, feedlot and the rest, have been spent in the first two months of the year. Now, what do we do?" Oscarson said.

The feedlot program is another story. Consider what happened in the span of only 72 hours last week.

Due to the original unallotment cutbacks, Mower County expected to lose half the $58,000 it was to receive from the state for its feedlot program.

By week's end, the Minnesota Pollution Control Agency was e-mailing feedlot officers saying the governor had reinstated the MPCA's feedlot program monies in his proposed budget.

It appears the county's feedlot program will be funded another year.

But the best advice may be "wait and see." Only a short time ago, the Mower County Commissioners were being criticized for building up the county's reserves and allowing a "rainy day" fund to grow at the expense of rising property taxes.

The rainy day is coming sooner than anyone thought.

No longer can Mower County rely upon a hefty fund balance (the much-talked-about "reserves" accumulated in the last decade) to bail out the county.

"We've been spending down the reserves every year and now that is going to come back and haunt us in a way we never expected," Oscarson said.

Once pegged at $35 million or more, the county's fund balance will be $5 to $6 million by the end of 2003. Oscarson predicted, "In another 18 months, we'll be broke."

Oscarson was candid about what the commissioners will be able to "touch" with their own spending reductions in response to the state's cutbacks in funding mandates and services.

"The county delivers services the state can't or won't deliver," he said. "So, just what can we cut?"

Vulnerable programs

The Chore Program that helps indigent seniors with household maintenance and other services is -- Oscarson's description -- "not required."

Home health care is not required.

Also not required are programs for new immigrants, teen court, family facilitator and truancy.

All are programs that serve citizens deemed most vulnerable.

Welsh said counties are handicapped by levy limits also, but Oscarson said raising the limits may not be needed immediately.

Welsh said without the ability to raise taxes, no other revenue source is likely in an economy reeling from a recession. That's all well said, but undone, when a survey of Minnesota counties reveals tax levies imposed by school districts, cities and counties will drive property tax bills -- due next month in the mail -- up 15 percent on average.

Thus, not only will Minnesotans be asked to pay more later to relieve the deficit, but they must pay more property taxes now.

The county may explore reducing the number of workers by attrition, according to Oscarson and Welsh.

When senior employees retire, they may not be replaced and their duties and responsibilities absorbed by others.

Also a pay freeze could be sought from the bargaining units representing county employees.

Programs that are considered no longer essential services could be eliminated.

Also, the Mower County Fair may be forced to consider charging for admission.

Lastly, Oscarson and Welsh said raising existing fees or implementing fees where none were previously collected is another option to deal with the expected impact of the state legislature's actions.

Retreat, but no surrender

Mower County officials and staff spent Thursday in the Ruby Rupner Auditorium examining the governor's budget proposal, what the legislators may do before adjourning and the county's response. They could factor in a new revenue forecast issued the same day, late adjustments in the governor's unallotment cuts and the property tax increase released Friday.

When they went home Thursday night, they heard district court officials weigh in with their predictions of gloom and doom for the state court system, which faces a $38 million spending reduction at a time when the caseload -- both civil and criminal -- is increasing by double-digits.

Everyone everywhere in county government and the state court system is sweating what is to come from St. Paul.

Asked to assess the attitude at Thursday's retreat, Oscarson called it "positively realistic."

"That's how I would describe it," Oscarson said of the retreat. "There was the clear sense of reality that county life as we know it today won't be the same. There are going to be changes. Big changes ahead."

Oscarson said department heads asked for "latitude to be creative" in responding to the financial crisis.

The county board's finance committee -- Ray Tucker, 2nd District, and Dave Hillier, 3rd District, -- will meet Monday to go over guidelines for the department heads to plan their response to the commissioners' call for trimming their departments' budgets in increments of 5, 10 and 15 percent.

The commissioners want to hear details from department heads on exactly how such reductions will impact on programs and services to the taxpayers.

"We need their input because we need to know what kind of an impact this is going to have on everyone," Ellingson said.

Lee Bonorden can be contacted at 434-2232 or by e-mail at :mailto:lee.bonorden@austindailyherald.com