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City may face more aid losses

July 27, 2011
Meg Alexander - Staff Writer , Fairmont Sentinel

FAIRMONT - While the City Council plans what it would like to accomplish in the next few years, it also should consider what it can do without, cautions Jim Zarling, Fairmont city administrator.

"What the state did to solve the budget this time around created already a $4 billion deficit for the next biennium," says Zarling, referring to the fix that relies on borrowing from state's tobacco settlement funds and delaying payments to schools.

"They're borrowing ahead on everything they can borrow ahead on," he said.

And cities are worried the Legislature's solution will continue along the same lines as it has the past few years. Since 2008, Fairmont has been losing allotted funding from the state, starting with $270,000 that year; then $229,000 in 2009; and $529,000 in 2010.

In addition, cities are stuck paying for the state's market value credit. Minnesota has continued to offer the credit for property taxes, even though the state can't afford to pay cities back. In 2010, Fairmont lost $244,000 because of the credit, and another $246,000 loss is estimated for 2011.

Recently, the city received notice that the local government aid it normally would have received on July 20 will be late, because of the state government shutdown, and aid for 2011 has been cut by $420,000.

"With LGA, it's easy for them to say, 'Sorry, you can't have the money. Figure out how to deal with it,'" Zarling said.

There has been talk about the Legislature cutting LGA altogether to St. Paul and Minneapolis and, according to Zarling, cities throughout Minnesota also anticipate losing their state funding sometime in the not-so-distant future. That could be devastating for Fairmont, since 60 percent of the city's general fund comes from LGA.

"If we lose that, I don't know what the answer would be," Zarling said. "... A 60 percent loss of revenue, I don't know that we have the ability to replace all that with property tax. I think there would be a revolt."

Even with these challenges, the City Council does not want to stop moving forward with projects, says Mayor Randy Quiring.

Where there's a will there's a way. In 2008, the same year LGA was cut, the City Council had levied $200,000 a year for identified projects through 2011. Despite the cutbacks in state funding, the city was able to accomplish a lot. Goals accomplished include:

o Installing playground equipment in Birds Park and Holden Park;

o Installing a basketball half-court at Birds Park;

o Completing rehabilitation of Gomsrud Park shelter house;

o Paving Lincoln Park parking lot and replacing the circle drive with curb and a rain garden;

o Replacing two docks, and continuing to work on a third;

o Completing Hobo Trail and park;

o Demolishing seven dilapidated houses, with two more in process;

o Rehabilitating 22 owner-occupied homes with $534,000 in housing grants;

o Researching, adopting and enforcing house clean-up ordinances;

o Purchasing and utilizing a new leaf vacuum, and opening a community compost site by the city's tree dump;

o Planning, building, and paying for a new municipal liquor store;

o Proceeding with street and airport improvements.

Projects under way in 2011 are reconstructing a segment of Albion Avenue; building a water treatment plant and a new ball diamond complex; resurfacing Cedar Park parking lot; planning for Lair Road bridge replacement; and relocating the line department warehouse with funds from Southern Minnesota Municipal Power Agency.

"We've done pretty well considering we've lost over $1.1 million in local government aid," Zarling noted.



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