City: LGA cuts could eliminate essentials

Talk about it

The cuts are getting closer to the bone.

If faced with what would be the third unallotment of Local Government Aid in the past two years, Red Wing might be forced to roll back core services, City Council President Mike Schultz said.

"It'll certainly have consequences," Schultz said.

In reacting to previous LGA cuts, city officials have frozen open staff positions and cut back on popular but non-essential services like recreation program hours and hours at the Colvill Aquatic Center.

But another aid cut, Schultz said, could force Red Wing to cut into its meat and potato services, like snow plowing.

Gov. Tim Pawlenty said Wednesday he may cut aid scheduled to be sent to cities and counties in December to deal with a $1.2 billion deficit in the state's current budget.

Of course, how far Red Wing rolls back services would depend on how much aid is cut. The city is set to receive $1.1 million in different forms of state aid, of which $542,000 is LGA.

Pawlenty has said he's not sure if he'll unallot the entire $400 million in aid going to cities and counties.

Whatever amount Pawlenty does unallot, Red Wing does have some recourse available to it, Red Wing Finance Director Marshall Hallock said.

"The writing has been on the wall for a while" that there was a potential for aid cuts and the city has tried to plan for them, he said.

Hallock said that's why City Council budgeted a large contingency fund for 2009. Every year the city budgets a contingency fund to pay for unexpected costs. But this year Red Wing put in more money than usual and currently has $500,000 left in the fund, Hallock said.

Also, cities that have their LGA unalloted may recertify and increase their local property tax levies to make up for loss of revenue.

"We'll have to look at (recertification)," if aid is cut, Schultz said.

If a recertified levy and the city's contingency fund aren't enough to cover losses in state aid, Red Wing could tap its cash reserve, Hallock said. Referred to by city officials as fund balance, this cash reserve keeps the city solvent throughout the year and can serve as an emergency fund.

City officials will likely tackle the possibility of LGA cuts at 5:30 p.m. Monday when City Council holds a budget workshop.

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