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Item No. 4 <br />Meeting Date: January 5, 2009 <br />Type of Business: Work Session <br />City Administrator Review: ______ <br /> <br />City of Mounds View Staff Report <br />To: Honorable Mayor and City Council <br />From: Mark Beer, Finance Director <br />Item Title/Subject: Discussion about Potential Budgetary Impacts resulting from <br />LGA Reductions <br /> <br /> <br />The state is experiencing significant financial distress and will pass part of that problem on to <br />cities and counties. The state is facing a current deficit of $426 million for the 2008/2009 <br />biennium and a projected $5 billion deficit for the 2010/2011 biennium. <br /> <br />The Governor in consultation with the legislature used his unallotment authority to reduce Local <br />Government Aid (LGA) and Market Value Homestead Credit (MVHC). The City had aid reduced <br />by $147,801 for 2008. The state certified LGA to the City for 2009 of $642,866 the City will also <br />receive approximately $185,000 in MVHC. In 2003, the state experienced a similar deficit and <br />at that time LGA was cut by 9.3% of aids plus levy. The state is probably in worse shape thus <br />the cuts may be larger. To put this in perspective an equivalent cut in 2009 would be $413,124. <br /> <br />I have attached some possible changes we can use to off-set the cuts that will occur. We have <br />fund balance in the General Fund that is a cushion for times like this, the Council has a number <br />of other options and we are prepared for this situation. This will not delay the street project or <br />trail project. <br /> <br />Respectfully Submitted, <br /> <br /> <br /> <br />Mark Beer