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1 City of Lino Lakes <br />Management Report, Page 6 <br />IIState's 1980 and 1981 fiscal years, while State commitments were increasing at a much <br />illarger rate and inflation was at 11% and 12 %. This imbalance (to over- simplify) is the <br />State budget crisis. <br />ilThe State of Minnesota has taken several actions to resolve its budget problem. A <br />1 large part of these actions have been to pass the State's problem on to local government <br />as evidenced by the 1982 increases in local property taxes (primarily local School <br />IIDistricts) and decreases in property tax related State aids. Current proposals now <br />being considered indicate that the State will continue to reduce its commitments and <br />1 obligations to local government and local taxpayers to resolve the State budget problem. <br />IIOne indicator of the financial strength or independence of a governmental unit <br />II(including the State of Minnesota) is the level of fund balance or reserve balance of <br />the general fund. Reserve balances are especially necessary during periods of high <br />1 inflation and /or poor economic growth. Without adequate reserve balances, a governmen- <br />tal unit may be unable to respond to economic conditions. With adequate reserve <br />1 balances, adverse economic factors are more manageable. <br />1 The undesignated /unrestricted fund balance of the General Fund of the State of <br />Minnesota (according to published and audited Annual Financial Reports), was as follows <br />1 for the past four years: <br />II Undesignated <br />Fund Balance (Deficit) <br />(In 1,000's of Dollars) <br />1 Date Amount Change <br />June 30, 1979 $ 234,486 <br />- <br />IIJune 30, 1980 (16,965) $(251,451) <br />June 30, 1981 (73,044) (56,079) <br />June 30, 1982 (705,268) (632,224) <br />1 <br />1 <br />