Talking Points: We're nearly face-to-face with the worst-case scenario
The City of Morris has already budgeted for 2011 based on the assumption it will be facing a decrease in state aid of about $360,000 in both 2011 and 2012 as the state contends with an enormous $6.2 billion shortfall in the next biennium.
The Republican-controlled House and Senate are working on an agreement to reduce Local Government Aid to cities by $102 million and reduce Market Value Homestead Credit by $48 million. The measure could be sent to Gov. Mark Dayton's desk by the end of this week.
The LGA and MVHC cuts are part of a $1 billion "Phase 1" first step of reductions the Legislature is proposing to begin tackling the overall deficit. Dayton has said he doesn't favor a piecemeal approach to the budget fix, but he hasn't yet indicated he will veto the measure.
Nonetheless, even while cities such as Morris have made preparations for the reductions for 2011, officials are worried that the aid cuts already made might be just the beginning. With the Republicans resisting many solutions which include tax hikes, there's a good chance more cuts could be in the offing.
We can ill afford that. Consider that two-thirds of Morris' $3 million General Fund comes from LGA.
The University of Minnesota's Humphrey Institute in June 2010 released a report it compiled for the League of Minnesota Cities that projected that if current revenue and spending trends continue and no policy changes are made, cities throughout Minnesota will be broke by 2015. The projection found that no matter where a city is located, no matter what its population, tax base, revenue sources are, the cities will end up in the red without major changes to city services and funding for them.
The "doomsday scenario" for Morris starts with reductions in staff. It's the least palatable solution, but payroll and benefits are the city's primary expense. If people aren't let go, services will need to be slashed significantly.
City Manager Blaine Hill said the city can survive the current reductions but that if the state carves much deeper the choices available to the city to balance its books grow much smaller.
Equipment money must be preserved so the city starts to look at more cuts within the budget, and then at layoffs.
"We're really at the point where there isn't any more room," Hill said. "We're at the end of the worst-case scenario.
Until it all hits the fan, it's possible taxpayers won't truly grasp the enormity of the problem. The League of Minnesota Cities has initiated a project, "Cities, Services & Funding: Broader Thinking, Better Solutions," and are seeking to play host to "community conversations" with residents about the future of city services.
The project's aim is to get people in Minnesota cities talking about the services they expect in their communities, how those services should be delivered and how to pay for them. The league has a Feb. 25 deadline for cities to respond if they wish to be a host to a discussion.
Applications can be submitted via e-mail to Rachel Walker, League of Minnesota Cities, at firstname.lastname@example.org. Walker can be contacted at (651) 281-1236 or (800) 925-1122.
It wouldn't be a bad thing to have such a discussion in Morris, before friends and neighbors are receiving pink slips, before we watch streets pile up with snow with no plows in sight and the city's many parks begin looking like pastures and we stand around thinking, "What happened?"