Unallotment effects to be felt locally

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Goodhue County officials once fearing severe state aid cuts now are worried about hefty blows to health and human services that will likely affect local programs.

Gov. Tim Pawlenty announced Tuesday he would cut $236 million from health and human services to patch the state's budget deficit without raising taxes.

"It's gonna be just brutal," Greg Schoener, Goodhue County Social Services director, said before Pawlenty's Tuesday news conference. "I just know my agency has a lot on their plate."

Hours before Pawlenty's announcement, Schoener shared with commissioners a draft of his 2010 budget, which already included $309,000 in cuts.

Schoener also told commissioners he would likely have to cut an additional $562,000 or find additional revenue to plug a hole filled in years past by reserve funds that have now dwindled to "dangerously low" levels.

Pawlenty's announcement will make the situation more difficult, Schoener said. But Schoener hopes some of the cuts he already is proposing will overlap with the Pawlenty recommendation.

"The cuts in human services are very drastic," said Scott Arneson, Goodhue County administrator.

Goodhue County aid cuts

Pawlenty's deficit-slashing plans include $300 million in cuts to cities, counties and townships so local aid to the county and the city of Red Wing will still be cut to varying degrees.

But officials were expecting worse.

"It's a lot better than we thought as far as aid goes," Commissioner Ron Allen said.

County officials say Tuesday's expected cuts will mean $332,054 less in state aid this year and $674,171 next year.

Commissioners and staff — who have been putting off capital projects, examining budget-cutting measures and delaying new hires — are confident they can put together a revised 2009 budget but worry about next year.

"There's some things we would like to do that we won't be able to," Arneson said. "It's not going to be easy. The commissioners are going to have some extremely difficult decisions in front of them."

The impacts of Tuesday's announcement will be discussed by county officials and commissioners during a budget direction meeting 8 a.m. June 26 in the Government Center IT conference room.

City: Relieved, not thrilled

Pawlenty's announcement could have been worse for Red Wing.

The governor unalloted $360,000 of the designated $1.4 million in local government aid set to go to Red Wing. City officials had feared Pawlenty would cut all $2.7 million in various types of aid Red Wing was set to receive in 2009.

That meant Tuesday's announcement brought some relief, Red Wing's Finance Director Marshall Hallock said.

But city officials aren't doing cartwheels.

"The cuts are still too deep," Hallock said. "It affects our ability to meet basic public services."

And a bigger challenge will come in 2010. Hallock said $900,000 will be slashed from the $1.4 million the city was set to receive next year.

Spared from cuts was $2.25 million in state utility aid Red Wing receives over two years for hosting the Prairie Island nuclear plant.

At least that's the case for now, Hallock said. City officials remain concerned that if budget forecasts remain gloomy that the utility aid may also be eliminated, he said.

Schools to borrow more

Pawlenty's unallotment action will mean increased borrowing — and greater interest payments — for the Red Wing School District.

Red Wing school officials braced for unallotment fallout one day ahead of the announcement. School Board members on Monday agreed to borrow more money in anticipation of Pawlenty's funding shift.

The governor's proposal calls for 27 percent of the state's 2010 K-12 payment to be delayed until 2011.

"We had heard enough to anticipate that the shift was going to be deeper," district Finance Director Brad Johnson said.

Anticipating that the shift will cause cash-flow problems for the district, School Board members authorized up to $5.2 million in borrowing. School Board members can choose to shrink the borrowing amount as the financial picture comes more clearly into focus, Johnson said.

Johnson said unpredictable education funding makes borrowing a common practice for districts. This year's funding shift is more dramatic than in years past, he said; the School Board's move on Monday authorized the district to borrow about twice the normal amount than in years past.

Interest on the amount could be as high as $140,000, Johnson said.

R-E staff writers Jen Cullen, Mike Longaecker and Jon Swedien contributed to this story.

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