INFORMATION 10-28-2002 - Laserfiche WebLink

Home Browse Search

C 145 University Avenue West, St. Paul, MN 55103-2044 Phone: (651) 281-1200. (800) 925-1122 TDD (651) 281-1290 LMC Fax: (651) 281-1299 LMCIT Fax: (651) 281-1298 Web Site: http://www.lmnc.org MEMORANDUM To: Mayors, City Managers, Administrators, and Clerks From: 3im Miller, Executive Director Re: 2003 City Budgets Date: Friday, August 16, 2002 Volatility in the state's budget over the past year is now translating into uncertainty for local budgets. Although the magnitude of the state budget deficit will not be officially revised until late November or early December, the Commissioner of Finance has recently suggested that the deficit could be as high as $2.7 billion for the 2004-2005 biennium. With the additional pessimistic economic news that has been released over the past several weeks, this fall's budget forecast could even exceed the Commissioner's gloomy figures. In recent weeks, the League has received numerous inquiries from member cities seeking advice on how to prepare for the uncertain state budget situation and the potential for state aid reductions. The situation for larger cities is further complicated by levy limits, which will be significantly more stringent due to a remarkably low inflation adjustment (0.76%) for 2003 levies. For many cities, levy limits will trim the list of policy alternatives available to address possible 2003 state aid cuts. To make matters more difficult, your city is undoubtedly facing other budget pressures such as rising employee health insurance costs, potential volunteer relief association contribution increases, lower investment earnings, and possible additional security costs in light of the September terrorist attacks. The purpose of this memo is to provide you with insights into this uncertainty based upon conversations we have had with key state decision-makers and information available to us at this time. The state budget situation is fluid and will undoubtedly change before the Legislature convenes in January. Although the League will be working with legislators to reduce the size of any proposed state aid or credit reimbursement reductions, it is important for your city to begin preparing now for the possible effects of a cut in state aids.