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MEMO Tut MAYOR A.•u CI'II CUUNCI I. 1 <br />PNUMI FINANCE I11Nta"IUR-TREASI!REM BRAGER 4 I <br />DATE NOVKXUF,, 26,I40 <br />SUBJECTt CONTING, NCY VIAN FOR POSSIRLE kt:olicriuN it' 14116 <br />STATE A I PIS <br />Recent forecasts by the Minnesota. Department of Finance <br />indicate a very strong tiklihooa that the State of Mtnnosota <br />will experience a budget deficit for the biennium eridiny <br />June 30, 1987 as a result of projected revenue shortfalls. <br />The deficit has be,•n estimated to be between $160 million - <br />$91S. Already Stalrt Ofticials and Legislators ndv,• begun to <br />talk about cuts in the State's budget to make up curse <br />projected deticits. Cuts in aids to local governments has <br />always come up in every dlscussiotis, Then -for.-, Ih,•re is a <br />very strong llklih aid that our '-,Late aids will her cut. On <br />November 8, i905 I attended a forum on Local Government <br />Revenue Stress whl h discussed tt-e state's revenue probl„ms <br />and the effect the, could have on local government. Neill" <br />Johnson, Deputy Connnissinner of Finance; Tom Triplett, <br />Commissioner of Re-anue; and Bill Schreiber, Chairman of the <br />House Tax Committee, were presenters on the State side and <br />Dr. Paul Hasbargen of the University of Minnesota gpoke on <br />the agricultural o,ttlook. As a result of attending that <br />Forum I believe, th,t the City could experience a 10-15 <br />percent reduction of local government aids, or <br />852,000-699,000. <br />Recalling the "tra„-na' that accomoanied a reductlo-1 In state <br />aids in 1981-19d2 I recommended to the Clerk--Adminlstratc,r <br />and Depatteent Hea•tti that the City take a proactive versus a <br />reactive position reyardlnq possible reductions in local <br />government aids. ' proposed ana they agreed that a <br />contingency plan o,,tltninq possible budget cuts be prepared <br />now to be used In the event of reductions of local <br />government aids. <br />The Clerk-Admirlsr dtor aid Department Heads met -n <br />November 19 and 24, and developed a contingency plan. The <br />plan.. addresses whd we presently believe to be the "worst <br />case scenario"; a 5i IS8(1,000) reduction In local govern- <br />ment aide. We hop that the 'worst case scenario" will not <br />be realized. Thor -tore, the plan is divided into three <br />levels of budget r-.ts: A, B, C. Cuts labelled "A" would be <br />made tirst; if ne, isary cuts lahelled "8" would be next, <br />and cuts labeled '('" wr�uld be made last. A deScrlption of <br />ana the rationale ',,r th.• cuts proposed tollows, <br />