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EGF, TRF, Crookston get word on Pawlenty's state aid cuts

Cuts in local government aid from the state would cost the city of East Grand Forks $173,300 this fiscal year, according to data the city released Tuesday.

Cabinet goes over budget
Commissioner Tom Hanson of Minnesota Management and Budget briefs reporters Tuesday on how the state will unallot nearly $2.7 billion in state spending. Behind him is his boss, Gov. Tim Pawlenty. Hanson is a Mahnomen native.

Cuts in local government aid from the state would cost the city of East Grand Forks $173,300 this fiscal year, according to data the city released Tuesday.

Next fiscal year, the cuts would cost the city another $420,000.

Statewide, cities expect to lose $147 million in fiscal years 2009 and 2010 under Gov. Tim Pawlenty's plan, announced Tuesday.

LGA makes up about one-third of East Grand Forks' budget with the rest coming from fees and taxes. This year, it was supposed to get $2.8 million.

Other cities in the region seeing cuts include Crookston, which would lose $167,000 out of $3.5 million, and Thief River Falls, which would lose $141,400 out of $2.7 million.

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The good news for East Grand Forks is cost-cutting measures put in place for this year anticipated a reduction of $250,000, City Administrator Scott Huizenga said. If the City Council chose to, he said, it could spend some of the money on things like replacing worn out vehicles.

More good news is the additional flexibility the city will have in next year's budget. Currently, the city is allowed to increase property taxes only about 3.9 percent under a state formula that accounts for inflation and reduction in LGA.

Next year, the city will be able to replace whatever amount cut with property taxes. That means the city would be able to levy a maximum tax hike of 15.9 percent. In practice, the council has often gone lower than the max.

"I don't think we'd ever go that high," council President Dick Grassel said. "I'd never go for that. I don't foresee our council doing that. I'd figure maybe half of that, maybe 7.5 percent; that might be the max."

But Huizenga said maxing out on taxes is not unprecedented. When the governor made similar cuts in 2003, he said, the council chose to replace most of what LGA lost.

At this point, the shape of the 2010 budget is a mystery.

"Where are we gonna cut?" Grassel said. "It could be many things. We're hoping we don't have to cut bodies, but that's a possibility."

Pretty much everything is on the table as far as he's concerned. Cities around the state have discussed four-day workweeks, furloughs and wage freezes, he said. Even closing an ice arena or the swimming pool isn't out of the question, he said, even if that'll make a lot of people angry.

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City leaders will know for sure if the LGA cuts are official around the first week of July, according to Huizenga. The city, he said, would have until Aug. 15 to decide how much to raise property taxes, though it could reduce that amount during budget discussion after that.

Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send e-mail to ttran@gfherald.com .

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