Local officials take wait-and-see perspective

Most expect

legislative

compromise

By FRITZ BUSCH

and KURT NESBITT

Journal Staff Writers

NEW ULM -- Area city government officials expressed varied reactions Thursday to Gov. Jesse Ventura's recommendations for fiscal year 2002-2005 budget adjustments to be presented to the 2002 Legislature.

Ventura said he looked at spending cuts first, held to tax reform without accounting shifts or gimmicks, didn't rule out tax increases and tried to prevent short-term government borrowing.

The fix uses the $667 million budget reserve now, but it includes a plan to restore 60 percent of it by July 1, 2003.

Local aids were on top of the 2002-2003 cut list at 5.2 percent. Aid cuts climb to 10.5 percent in 2004-2005. Other cuts were higher education (2.5 percent), health and human services (1.5 percent) and K-12 Education (.9 percent).

The governor also proposed reductions in two aid programs to cities and counties -- Local Government Aid and the Homestead and Agricultural Credit Aid programs.

Proposed tax increases included a 5-cent gas tax increase, indexed to inflation. There were no transportation project reductions. Most state agency operation cuts varied from 5-10 percent.

Limited fee increases included a 911 surcharge and water quality fee.

The plan did not raise local reserves, but the governor said they should be used locally to manage local budgets.

Sen. Dennis Frederickson (R-New Ulm) said he thinks Ventura should be complimented for coming up with an honorable solution to the state's budget problem, but he disagrees with proposed K-12 cuts and new taxes on mechanic's fees and attorney services. He said those taxes will affect lower-income taxpayers the most.

"This is but a starting point," he said. "The Senate and the House are going to develop their own solutions and we'll come to some compromise before the session's done."

Frederickson said he agreed with the governor's idea that the Legislature should resolve the deficit "sooner rather than later," but thinks the major cuts in the budget shouldn't be made until after the Department of Finance's next revenue forecast is made in February.

New Ulm City Manager Brian Gramentz took a wait-and-see view of the proposals.

"We'll have to wait for the real decisions to be made in the Legislature," Gramentz said. "If cuts aren't made there, we know where the governor is headed."

Gramentz wasn't surprised by the proposal because it was stated in less detail last week.

"What the Legislature might come up with could be totally different but still achieve acceptable results," Gramentz said.

Likewise, Brown County Administrator Charles Enter felt the governor's budget was simply a starting point. County officials plan to keep track of developments in St. Paul as they affect the county. Brown County currently has about $8.6 million in state property tax aids in its draft 2002 budget, including about $1.1 million worth of HACA.

"It's early in the process," he said. "We're taking it one day at a time."

Sleepy Eye City Manager Mark Kober said on the surface, it doesn't look like proposed cuts will have a huge effect on his city. He actually expected more severe cuts.

Kober said it was hard to measure the effect of local government aid cuts until there is more clarification.

He expects big battles in the Legislature.

Springfield City Manager Mac Tillberg is looking forward to the Legislative session for answers.

"You don't know how sacred cows are until you roll up your sleeves and start whacking at them," Tillberg said. "I'm praying for leadership. We sure need it. Rhetoric and bullying disenchants everybody."

Tillberg said his personal goal in his 20 years of city administration work is to maintain a stable tax base to eliminate the roller coaster ride of frequent tax cuts and increases.

Ventura's proposal documents and related information can be found at www.finance.state.mn.us

District 88 is fortunate that it passed an operating referendum last November and that a fund balance exists, Superintendent Harold Remme told the school board Thursday night, commenting on the potential impact of Ventura's deficit reduction plan.

Both factors will soften any financial decisions made during the 2002 legislative session, said Remme.

Yet Remme is apprehensive of the potential impact on the local school district.

He said District 88 could lose between $290,000 and $1.02 million, depending on how the state decides to handle the $415 per student that districts currently get in place of old school referendum money.

Placing a sales tax on all school purchases may cost the district another $50,000, said Remme.

He stressed, however, that all his numbers at this time are "strictly conjecture," and would not as yet attempt to quantify the effect of potential cuts in state contributions to teacher retirement, special education, adult basic education, services provided by the Department for Children, Families and Learning (which may see 10 percent cuts), and many other programs.

Journal Staff Writer Kremena Todorova also contributed to the story.