Becker County, Detroit Lakers brace for big state cuts
As a not-a-very-merry Christmas present, the state has handed Becker County a $300,000 cut in state aid for this year.
That's a 21 percent cut, but -- adding insult to injury -- the state is calling it a 1.7 percent cut.
"That's so deceitful," said Becker County Administrator Brian Berg. "They are counting our own county levy and everything else to come up with that."
Because the $300,000 cut came so late in the year, the county can't do anything except taking it from reserves, Berg said.
Fortunately, County Auditor-Treasurer Ryan Tangen did well with the county's investments this year. The county will likely see almost $1 million in interest income this year, much more than the $650,000 that was budgeted. The reserves are invested in low-risk areas like U.S. government securities.
"He watches it very closely and moves it at the right time," Berg said.
That may have saved the county's bacon this year, but it probably won't happen again in 2009.
"Next year will probably be a tough time for interest income," Berg said.
More cuts in state funding are expected next year.
The $300,000 cut in aid to Becker County was just the beginning of the slashes announced Friday by Minnesota Gov. Tim Pawlenty as part of his plans to solve a $426 million state budget deficit in the current biennium.
It includes $110 million in aid cuts to cities (Detroit Lakes took a $140,000 cut in LGA) and counties -- and $73 million in reduced human services spending.
But that's only a tenth of the budget problem that will be faced by lawmakers when they convene Jan. 6, to fill a $4.8 billion hole in the next biennium budget.
Detroit Lakes will have to take the $140,000 out of its general fund reserve, which is now about $1.5 million, or a 3-month reserve.
The reserve is designed to carry the city through spring when it receives its next input of property tax revenue, said City Administrator Bob Louiseau.
Since the $140,000 comes out of this year's revenue, there is no way to make it up by cutting expenses in the few days left in 2008.
He has directed department heads to find $140,000 in offsetting cuts during 2009.
"We anticipate additional cuts," he added. "We're focusing on trying to maintain essential services."
City staff will be brainstorming over the budget issue over the next few weeks to come up with recommendations for the city council. Louiseau said he has heard no word on how steep additional cuts might be in the 2009-2010 biennium.
Becker County has been battening down the hatches and preparing for a budget storm for months.
The county's 2009 budget and levy have been set (it calls for a 4.6 percent levy hike) and the loss of future aid will have to be dealt with by cuts and savings at the county level, Berg said.
"We're not going to lay it on the backs of taxpayers," Berg said. These are tough times for individuals and business, and "we feel local government has to adjust," he added.
Demands on human services will also be higher as the economy goes south, so the county must plan on meeting that challenge as well, Berg said.
To save money on rent, taxes and utilities, the county has been consolidating offices into the courthouse and into the human services building.
The county was paying $48,000 a year in rent for the Multi-County Nursing Services building, $60,000 in rent and taxes for offices in the Courthouse Annex near the mall, and $25,000 a year for rent on the county attorney's office downtown.
The county has even brought the motor vehicle department into the courthouse. It had been located in the annex next to the mall, but is now in a former jury room on the first floor.
The county will save $20,000 a year by making that move, Berg said.
Positions have also been consolidated to save money, the auditor position was merged into auditor-treasurer, and environmental services is now handled by county assessor Steve Skoog.
"We're going to look at cuts, trimming (and) efficiencies," Berg said. "With fuel prices down, it will help the sheriff's budget, highway department, and eventually heating ... we've tried to be proactive, and I think we have been."