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Local officials brace themselves - deficit Minnesota faces record $5.27 billion deficit Staff Writer A budget deficit of $5.27 billion over the next 2-1/2 years looms over the state of Minnesota.
The shortfall, announced by state leaders Thursday, includes a $4.85 billion shortfall for the upcoming two-year budget cycle, plus a $426 million gap for the current budget that ends in June.
Local government entities could feel a pinch as well.
"We're a political subdivision of the state so any time the state has a budget crunch it's reasonable to expect counties are going to share in the pain," said Crow Wing County Administrator Tim Houle. "Given the size of the budget deficit, I suggest this might be the most challenging budget in my 14-year career."
Brainerd City Administrator Dan Vogt said he hopes local government aid from the state, of which the city receives about $4 million, isn't reduced. He said the city is already levying the maximum amount - $4 million - it can from taxpayers.
"We certainly can't raise our levy," Vogt said. "If LGA is cut, we'll have to just make cuts to the budget."
Brainerd City Engineer Jeff Hulsether said state aid for roads would not be affected as the money is constitutionally dedicated through the gas tax.
Baxter doesn't receive local government aid but does receive market value credits. Mayor Darrel Olson said at most the city could lose $100,000 if the credits are cut.
"I know it's not a lot of money for some people, but for a city our size it's pretty substantial," Olson said. "Whatever they cut would be bad."
All Minnesota counties receive county program aid for mandates set by the state. Houle said those include paying for the recorder's office, state elections and having a county board.
The county also receives state funding for specific programs, like library services, health and social service programs, transportation, parks and grants for all-terrain vehicles and boat and water enforcement.
"You can't throw a rock in Crow Wing County without coming across some different form of intergovernmental aid coming from the state to the county," Houle said. "It's hard to think this won't have an impact on every area of our local government."
If funding to those programs is cut, Houle said he hopes the state will be flexible in mandates and requirements to the county. If not, the county would be forced to look at cuts to areas not mandated by the state, such as law enforcement and county roads, which he said would be foolish.
Houle said the county started planning ahead in August for possible cuts by the state. The result will be more compatibility between departments while saving the county money.
"I think we can do it better but we've got to have the state's help, their trust and they have to give us some flexibility," Houle said. "If not, then it's going to get ugly ... because we're so limited in what's not mandated in county government."
Public schools and higher education are the largest recipients of state tax revenue and Brainerd Superintendent Steve Razidlo knows the timing of the economic downturn has been problematic for everyone.
"But the picture locally of this news is perhaps worse than it is for other school districts across the state of Minnesota," Razidlo said. "We're concerned for our students and we're concerned for our citizens."
The problem, Razidlo said, is the Brainerd School District is $500 below the state average per student for funding. He said whatever money there is for schools in the next biennium he hoped the state would equitably distribute.
"After five consecutive years of cuts, and deep cuts last year, having Brainerd remain $500 under the state average with whatever funds are available seems unfair and unacceptable," Razidlo said. "We'll continue to lobby without apology for a greater sense of equity for regional centers like Brainerd."
For the school district's part, Razidlo said school officials will continue to work toward maximizing efficiencies and cutting where they can.
At Central Lakes College, which is part of the Minnesota State Colleges and Universities system, President Larry Lundblad said a worst-case scenario would be a budget shortfall in the fiscal year, which ends June 30.
Though he won't know what will happen until the Legislature and Gov. Tim Pawlenty act on cuts, Lundblad said the CLC administration has already started looking internally at its budget and spending.
"It's going to be a wait-and-see game," Lundblad said. "Obviously we know there will be a major impact, but we're not quite sure of the magnitude."
MATT ERICKSON may be reached at matt.erickson@brainerddispatch.com or 855-5857.
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