BLUE EARTH - Blue Earth is among cities preparing for a potential blow to Local Government Aid.
City Administrator Kathy Bailey recently attended a conference where she learned the state faces a potential $4 billion budget deficit.
Gov. Tim Pawlenty has asked all of his department heads to cut 5 percent from their budgets to reduce the deficit to $2 billion. Bailey said there are strong concerns that state aid to cities also could be trimmed.
This poses a large problem for Blue Earth, since it could lose up to $700,000.
Local government aid is dispersed in two payments. The $700,000 involved is slated to help Blue Earth get through the first half of 2009, Bailey said.
"The bond payments already locked in that we're gonna have to make in that first half of the year, we're going to be short funding for," Bailey said.
Mayor Rob Hammond said the last time local government aid was cut, the city lost $200,000.
The city's Truth-in-Taxation hearing is Dec. 1, while the governor has until Dec. 20 to make a decision on any cuts to local government aid.
Bailey said Blue Earth has been looking at a zero percent property tax levy hike for 2009, but given the potential aid cut, she has other recommendations:
o Increasing all employees wages by 3 percent per union contracts. Bailey also recommended changes to employee health insurance plans and wants the council and unions to look at other options in 2009.
o Not funding a four-wheel drive police squad for $35,000 and not providing funding for computer monitors for $3,500 if state aid is trimmed.
o Funding squad car replacements through purchases rather than leases. Bailey said purchasing would allow the city to keep vehicles longer than three years, and give it something to sell in the end.
o That in the future, the police department be managed like a smaller city by having a patrolling chief who is paid hourly. She also suggested one less full-time police officer. Bailey said this would save the city about $90,000. She recommended considering this option when an officer leaves the department, rather than laying one off.
o Fund a Putnam Park shelter and replace the statue and bricks by using $50,000 from the liquor store reserve. Bailey believes the city should look at using liquor store reserves to fund other park projects in the future.
o Increase the levy by 3 percent to allow for a state aid funding cut. Bailey said the difference is $80,293.
"This is not to be mean to the citizens of Blue Earth, but to give us a cushion in case LGA is cut," Bailey said.
If state aid is not cut, or the cuts are not as severe as planned, the levied "cushion" would help fund street repairs.
The council took no action on Bailey's recommendations, but will review them at a meeting 4:30 p.m. Monday.