City Council ponders service cuts

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Red Wing City officials say they'll need to cut some city services in order to make ends meet in 2009 and beyond.

Service reductions would come in the wake of possible state aid cuts. City officials have begun planning how to carve out $2.7 million from this year's city budget — a 15 percent reduction.

The city's top brass fear the state legislature will cut Local Government Aid to overcome its multi-billion dollar budget deficit. Whether or not the state eliminates Red Wing's aid won't be known until legislators conclude their current session in May.

"We don't want to be alarmist but we want to be cautionary," City Finance Director Marshall Hallock said Saturday during Red Wing City Council's annual January workshop.

The city has already made plans to delay a number of road construction and public works projects — the same strategy officials used the last time the city received no state aid in 2003.

But putting off projects won't be enough to handle what will likely be a sustained economic downturn, City Council Administrator Kay Kuhlmann said.

"This isn't a blip like 2003," she said. "This is our new world. ... There does need to be a reduction in services."

Closing the city's pool at Colvill Park, cutting back on some park maintenance, or reducing the frequency of garbage pickups are some of the suggested cuts.

The council did not draft any specific cuts on Saturday but did focus on creating a process for making budget reductions.

Council members agreed public safety outweighed the importance of park and recreation services, but said they needed more information to decide exactly where cuts would need to be made.

To assist the council, city department heads will outline what 5-, 10- and 15-percent budget reductions would do to their departments.

Service reductions might also mean cutting some city staff, city officials said. No specific positions were mentioned. Meanwhile, the city has 19 open positions it has frozen.

Council member Carol Duff stressed the importance of creating a dialogue with residents and considering their input.

Council President Mike Schultz agreed, saying that by hosting public informational sessions the city could gain public support. The council discussed hosting those informational meetings in the months to come.

In addition to LGA, city officials will also keep a close eye on the state's utility aid program, which gives cash to cities for hosting a major utility company.

Red Wing is one of a handful of cities statewide set to receive aid from the program — $75,000 this year and 1.5 million in 2010.

However, a number of city officials were pessimistic the utility aid would survive the current session.

"You can bet (Governor Pawlenty) is going take it," Council member Dean Hove said.

The utility aid program was adopted during the legislature's last session to offset the loss in revenue cities were subjected to after a Minnesota Department of Revenue rule change lowered the taxes for utility companies.

Red Wing and Xcel Energy had a contract that softened the blow for the city before the utility aid program was adopted.

Xcel agreed to make payments to the city as part of the contract, which was terminated automatically when the utility aid program was adopted.

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