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145 University Avenue West, St. Paul, MN 55103-2044 <br /> Phone: (651) 281-1200. (800) 925-1122 <br /> TDD (651) 281-1290 <br />LMC Fax: (651) 281-1299 LMCIT Fax: (651) 281-1298 <br />Web Site: http://www.lmnc.org <br /> <br />MEMORANDUM <br /> <br />OCT 2 3 2002 <br /> <br />To: <br /> <br />Mayors, City Managers, Administrators and Clerks <br /> <br />From: <br /> <br />Jim Miller, Executive Director <br /> <br />Re-' <br /> <br />December aid cuts becoming more likely <br /> <br />Date: Tuesday, October 22, 2002 ~./. ~'~/~-~ C~0"~ ~'~' j~''''''- ~ <br /> <br />In mid-August, the League distributed a,memo outft~ing considerations for your city budget due <br />to the uncertainty surrounding the state s budget.' This memo is intended to update the <br />information contained in our previous document. The focus of this memo is not on the much- <br />publicized 2004-2005 biennial deficit that could exceed $3 billion. Rather the focus is on the <br />immediate fiscal year budget and the possibility that by the end of current fiscal year on June 30, <br />2003, the state could face a deficit that will require almost immediate remedial action. This <br />could include reductions or delay of December aid payments. <br /> <br />Two weeks ago, the State Department of Finance released the quarterly economic update. This <br />quarterly update is not formal state budget forecast. It is a report on year-to-date revenue <br />collections compared to previous forecasts, and makes note of any significant economic or <br />revenue developments that have occurred since the last formal forecast. <br /> <br />The news at the update was again pessimistic. The continued slow recovery from the recent <br />recession has translated into a slower rebound in the state's tax collections for the current fiscal <br />year. If current tax collections remain dampened, the state could have a deficit for the balance of <br />the current fiscal year. <br /> <br />The next official prediction of the status of the state budget will occur on December 3. The <br />Department of Finance will release its state budget forecast on or around that day and if the <br />short-term projections indicate a 2003 deficit beyond the state's budget reserve, the state will <br />likely have to take quick action. <br /> <br /> <br />