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MEMO TO: <br />MAYI)R MU) CITY CUUNC4L <br />FROM: <br />FINANCE OIREC'fOR-TREASURER BRAGER <br />DAIK: <br />NOVEMB):r. 26, 1985 <br />SUBJECT: <br />CONTINCENCY PI,AN FOR POSSIHLF. <br />RE000TION OF 19H6 <br />STATE A I DS ' <br />Recent forecast:: by the Minnesota Department of F'in.ance <br />indicate a very sliong Iikiihood that the state of Minnesota <br />will experience a I,udyet deficit for the biennium ending <br />June 30, 1987 as a result of projected revenue shortfalls. <br />The deficit has be,•n estimated to be between S160 mall inn - <br />$915. Already Stay! Officials and Legislators havo begun to <br />talk about cuts in the state's budget to make up these <br />projected deficits. Cuts in aids to local gnvermaents has <br />always come up in ..very discussions. Therefore, th,•re is a <br />very strong liklihood that our state aids will be cut. On <br />November 8, 1985 f attended a fcrum on Local Government <br />Revenue Stress which discussed the State's revenue problems <br />and the effect they could have on local government. Nallie <br />Johnson, Deputy Commissioner of Finance; Tom Tripirtt, <br />Commissioner of Revenue; and Bill Schreiber, Chairman of the . <br />House Tax Commltte�-, were presenters on the State side and <br />Dr. Paul Hasbargen of the University of Minnesota spoke en <br />the agricultural ourlook. As a result of attending that - <br />Forum I believe th.it the City could experience a 10-15 <br />percent reduction „f local government aids, or <br />$521000-$89,000. <br />Recalling the "trd... na" that accompanied a reduction in state <br />aids in 1981-1982 1 recommended to the Clerk -Administrator <br />and Depailma,it Haa•:-, tt:at the City take a proactive versus a <br />reactive position regarding possible reductions in local <br />government aids. I proposed and they agreed that a <br />contingency plan notliniiiy possible budget cuts be Prepared <br />now to be used in the event of reductions of local <br />government aids. <br />The Clerk -Administrator and Department Heads met nn <br />November 19 and 26 and developed d contingency plan. The <br />plan addresses wha, we presently believe to be the "worst <br />case scenario'; a 15% (S89,000) reduction in local govern- <br />ment aids. We hope that the "worst case scenario" will not <br />be realized. 'therefore, ,he plan is divided into three <br />levels of budget cuts: A, B, C. Cuts labelled 'A" would be <br />made first; if necessary cuts labelled "e" would be next, <br />and cuts labelled "C" would be mane last. A description of <br />and the raticidle for the cuts proposed follows. <br />