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Area city budgets go lean into the new year

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MONTEVIDEO -- City employees in Montevideo voluntarily agreed to cut a previously negotiated pay increase by half.

City council members in Olivia imposed a wage freeze on city employees on the top of their pay scales.

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In Dawson, council members decided not to re-fill the position of a retiring police officer, reducing the hours of police coverage in the community.

And in Benson, the retirement of a wastewater plant operator became the occasion for the city to begin contracting for those services from a private firm.

Communities around the region will be making lots of noise when the Legislature convenes in hopes of blocking further cuts to Local Government Aid.

During past few weeks, they've quietly gone about making the tough decisions. Area municipalities finished the year by adopting their 2010 budgets, and all show the strain of declining LGA payments.

Local property tax levies will rise in most communities and city services will again be cut.

Since 2002, LGA payments in Minnesota have been cut by $782 million, and city property taxes have increased by 64 percent as a result, according to the Coalition of Greater Minnesota Cities. Rural communities have been the most affected by the LGA cuts: The majority of LGA payments go to outstate communities.

Budget cutting has been going on in Benson ever since Gov. Tim Pawlenty began pushing for LGA cuts, according to Mayor Paul Kittelson. He said many of the cuts may not be readily apparent to the public, but increasingly, the choices for council members are becoming far more difficult.

"It's a matter of what services we need, versus what services we can afford,'' said the mayor.

Benson council members approved a 24.2 percent levy increase for 2010 over 2009.

Cuts to LGA were on the minds of Appleton city council members as they approved a 32.5 percent levy hike. They also expressed concerns about the closing of the Prairie Correctional Facility and expectations that it will be challenging its property tax assessment.

Increases were not as large elsewhere, but most communities increased property taxes to offset some of the LGA cuts. Montevideo raised its levy by six percent for 2010, after consecutive years of holding increases to under three percent.

Granite Falls is hiking its levy by 4.6 percent. Mayor Dave Smiglewski said council members approved the increase rather than "kick the can down the road'' and put off needed purchases for equipment. There's no certainty that the economy is going to dramatically improve in a year or two, he said.

He also noted that city tax payers will probably see some relief on their county and school taxes. Higher farm land valuations are shifting more of the county and school tax burdens to rural properties, he pointed out.

The city of Olivia bucked the trend by reducing its 2010 levy by eight percent, but is tapping reserve funds, freezing some wages and making cuts. Cuts include reducing the city's economic development position.

The city of Litchfield saw difficult times coming a few years ago and began a process of reducing its work force through attrition and planned lay-offs, according to Mayor Vern Madson.

The city reduced its city staff from 59 to 39, and cross trained everyone so that workers can perform duties outside their normal departments. Mayor Madson noted that the city has been able to limit tax increases as a result. The city portion of his home property taxes this year rose by only $15.

Keeping spending and taxes as "flat'' as possible was very much the goal for city council members in setting the city of Renville's budget for 2010, according to Paul McLaughlin, city administrator.

All of the cities have been inflicting a series of small cuts, year by year, to a broad range of services. For instance, Montevideo will be opening its pool one week later and is reducing the hours for summer help, said City Manager Steve Jones.

Cities are employing a wide range of belt-tightening strategies, but the most common one has been to put off making purchases and projects for the future.

It worries them all, as aging squad cars and banged up equipment will eventually see their day. "It catches up with you,'' said Mayor Kittelson.

He said the city has been playing it "pretty close to the vest'' when it comes to the budget, and should manage the coming year without major upheaval if the state doesn't deliver any real surprises.

Long term, Mayor Kittelson said he is concerned about what will happen to LGA and how rural communities with limited property tax bases will manage. "I don't think it looks good for LGA,'' he said. "I really don't.''

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