Talking Points -- Government taketh and taxpayers prepare for more giveth
Because Minnesota's state government won't giveth and instead will taketh away, Morris taxpayers may discover that what they had been given will soon be taken away.
That's pretty much the budget situation the City of Morris finds itself in.
Because of aid cuts to cities at the state level, it appears Morris residents will not only lose a tax break they were given for this year, their 2010 tax rate will be higher yet.
City Manager Blaine Hill and his staff have been working over the budget for some time, and he will present some of his recommendations to the City Council at its meeting Tuesday.
What appears will happen is that a 5.5 percent tax cut city taxpayers enjoyed this year will be no more, and another 3 percent tax hike will be required to get the city close to a balanced budget while still keeping essential services intact and city employees on the job.
It could be much worse, Hill said.
The Morris City Council in December 2008 passed a 2009 budget of about $8.4 million and a levy of almost $1.1 million.
This came after Gov. Tim Pawlenty used his powers of unallocation to take away about $128,000 of Local Government Aid money Morris was due to help erase a $426 million state shortfall for 2008.
Cities are facing an even larger reduction in LGA this year and 2011 could be a economic disaster waiting around the bend.
Morris was slated to receive about $2.3 million in LGA, which represents the majority of the city's $3.4 million General Fund. The governor in January proposed an LGA cut of almost $172,000 for 2009. The state House proposed $29,646.
But the cities were given authority to recapture those funds through special levies. Had the city done that, taxpayers would be looking at a 23 percent tax increase, Hill said.
"Now, we're not going to do that," he said. "But what we will do is throw it all out on the table."
What's being proposed is an 8.5 percent increase -- rescinding the 5.5 percent tax decrease and adding 3 percent. Hill stated that that amounts to a 3 percent hike over what city residents forked over in 2008.
That's pretty good news considering the alternative. But problems still exist. For one, the city's General Fund still isn't balanced, with a shortfall of about $80,000, Hill said, also noting that the city wouldn't be doing itself any fiscal favors by slicing out items such as big-ticket equipment purchases since eventually they are necessary and only get costlier as they are put off.
And cities can almost certainly expect another aid cut this December.
Right now, the governor wants to cut Morris' LGA by almost $361,000 in 2010. The House wants a $46,000 cut and the Senate is proposing a $24,000 reduction.
Hill also has union negotiations coming up, although he's confident everyone involved fully understands the situation.
"All you have to do is pick up a newspaper or watch TV and see that there are (wage) freezes everywhere," Hill said. "Everyone knows that next year is a year to hold your own and go from there."
However it works out, City Council members and city officials will have a difficult task ahead of them: More budget cuts.
"Our plan is to keep taxes to a manageable level and cut within the budget," Hill said. "People are going to get that (tax) mailing from the county and they're going to freak out. But maybe it's not all a bad thing because then people will know what the state is dealing with in this situation."