City and state officials have been predicting substantial cuts in funding this year, but before the question of “how much” can even be answered, they must determine where they can cut corners in anticipation of slashed aid.

The City of Austin is taking a hard look at its departments as they wait; Gov. Tim Pawlenty plans to submit his budget to the State Legislature on Tuesday, but a veto is expected, which may prolong the process.

“More and more cities are doing some pretty significant things in terms of cutbacks,” reported city administrator Jim Hurm, who attended a Coalition of Greater Minnesota Cities last week at the Capitol with Mayor Tom Stiehm and council members Brian McAlister and Janet Anderson.

“What I got out of that meeting is that no one has a clue what is going to happen,” McAlister said during a city council work session Tuesday.

“We anticipate more cuts,” Hurm said, explaining that nearly $500,000 was already cut from Austin’s budget in December.

“He (Pawlenty) has a history of not being a fan of Local Government Aid (LGA),” he said.

Austin is heavily dependent on LGA: 54 percent of its general fund ($7.77 million) comes from the state. If all LGA was lost, the city would have to more than triple its property tax level to compensate.

“We could be halfway through our budget when we find out how much we are going to lose,” Stiehm said, adding he believes there will be “sacred cows out there protecting certain areas.”

Hurm has given department heads directive to seek ways to reduce costs, and some have already been taking initiative. Staffing at Riverside Arena has been decreased by 40 percent, and Packer Arena is closed Wednesdays in addition to staffing cuts.

Tom Dankert, director of administrative services, said that unofficially, the city has put a freeze on capital expenses with the exception of three new police cars. Freezing wages, however, is not an option because of contracts.

Cutting expenses and hours was decidedly more favorable than eliminating positions, some officials agreed.

“The economy is going to turn around and things will get better,” council member Jeff Austin pointed out.

“We need to be creative,” Hurm told council members. “We also need to find ways that are as painless as possible.”