Minnesota’s $4.8 billion balancing act

Published 1:58 pm Saturday, February 7, 2009

When Gov. Tim Pawlenty unveiled his balanced budget two weeks ago he said it “sets priorities for a better future.”

Minnesota counties — Mower County among them — worry that the governor will balance the state’s budget on the backs of local government — cities as well as counties.

Smarting from a string of unfunded mandates and cost-shifts that place the burden upon local governments to provide essential services, the local governments feel reductions in Local Government Aid and County Program Aid monies will negate many programs and services citizens have come to depend upon receiving.

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The governor’s plan focused on “strategic investments” to spur job growth and improve K-12 education.

The proposal for FY 2010-11 would spend $33.61 billion, a 2.2 percent reduction from current FY 2008-09 general fund expenditures of $34.36 billion.

It would accomplish the governor’s crucial goal: Erase a projected budget shortfall of $4.8 billion.

To do this would also require spending reductions and other savings of $2.5 billion while using federal stimulus funding and other resources to provide $3.2 billion additional savings.

New spending initiatives, tax cuts, and placing $250 million in the budget reserve totaling $860 million would also be needed to accomplishing the governor’s goal.

“The upcoming budget debate should not just be about where we are now. It should be about where we’re headed,” Pawlenty said. “That means looking forward, not back, and setting priorities that will deliver a better future. This is a plan that doesn’t increase tax burdens on struggling families and job providers, lives within our means, and positions Minnesota for growth.”

Mower County Coordinator Craig Oscarson and finance director Donna Welsh have their work cut out for them. They are the point persons in the county’s plan to deal with the pending state spending reductions in the sour economy.

The county coordinator is fond of saying, “The devil is in the details,” when examining proposals and that is how he said the governor’s proposal had to be studied.

Oscarson reported to the Mower County commissioners at a recent meeting just what had to be done.

One prime target for attention is the Department of Human Services.

The governor’s plan calls for “slowing down” the rate of spending growth in programs while preserving core services for children and the most vulnerable.

Reforms will simplify the delivery and financing of “safety net coverage,” Pawlenty said.

That caught the attention of Mower County officials and staff.

“One of his proposals is to create 15 regional health and human services centers around the state,” Oscarson told commissioners. “That could mean there would be no Mower County Human Services.

“That would mean that people would have to drive to the new regional center to obtain services,” he added.

According to Oscarson, the proposal would include a $279,000 reduction in DHS spending for Mower County this year “if it agreed to the regional center proposal.”

If the county refused, the reduction would be $435,000.

That prospect underline an earlier comment by Oscarson that citizens will have to decide “where they can get along with less government and less services.”

Pawlenty’s proposal for a new collaboration between the state and counties to improve the delivery of human service programs seems naive at first glance, because it would require more — driving to a regional center — from those citizens already in dire financial straits.

However, the governor made a case for the proposal.

A portion of proposed county aid reductions can be recovered if counties comply with proposed service reforms, he said.

As Oscarson explained the proposals, they sounded more like threats.

For instance, the Governor is also proposing to allow counties to opt-out of some mandates to provide flexibility without adding state costs.

“At first glance, that sounds good,” Oscarson said. “However, if we have to continue those services and pick up all costs that’s not good.”

Again the proposal came with an apparent penalty.

If Mower County agrees to the governor’s flexibility idea and opts out of certain programs, its reduction in County Aid Program money would be $504,331.

If it doesn’t, the reduction would amount to $716,000.

Either way, Mower County would lose money it now depends upon to provide programs and services.

The county coordinator also warned county commissioners, “The governor is proposing to reduce grant money in the area of public health.”

This would happen at a time citizens are requesting more public health services, according to Oscarson.

The county coordinator also predicted the county can expect “hits” in non-related program areas, which will also compound the county’s financial woes in the year ahead.

Ray Tucker, 2nd District county commissioner and chairman of the county board’s finance committee, said, “We are going to have to prioritize those non-related programs that we want to fund.”

One such example is the publication of county legal notices in designated newspapers.

The legals include minutes of official meetings, bids and other notices and the county’s annual financial report.

“In the future counties may want to publish their legals on their Web sites for people to see,” Oscarson said. “Of course, that would require a change in the law.”

Estimates of the revenue stream created by publishing Mower County legals reach $40,000.

Oscarson said the county will apply for a share of the Obama Administration’s economic stimulus package monies — when approved by Congress — for its new jail and justice center project in part to offset the impact on taxpayers when the $36 million project is financed and to react to the expected state spending cuts coming in 2009.

Mower County’s expected County Program Aid reduction this year is predicted to be $2.7 million, according to Oscarson.

When that reduction comes, it could be critical.

“The question for you to decide is ‘What are you going to do if it comes half-way through the budget year?’”

The county board’s finance committee will review the county’s options with Oscarson and Welsh.

Then, it will call for a work session on the dilemma for the entire five-member county board this spring.