Agenda Packets - 1990/02/20 - Laserfiche WebLink

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an extension of the formula provision at this time., This position is also consistent with long standing unwritten policy of the AMM to not pursue positions that would take away current resources from cities statewide or regionally. In addition to adoption of this policy in reaction to what is sure to be a major legislative issue, the Board has entered into a contract with two consultant lobbyists to provide increased legislative visibility and to work with the AMM Legislative Contact System. It appears that along with this issue, there will be major legislative action in the other AMM very high priority issues of TIF, Solid Waste Management, Land Use and Comparable Worth. Although the 1990 Legislative session was supposed to be quiet and short as concerns city issues it is developing into something quite different. STATE BUDGET DEFICIT. The 1990 legislature must deal with a current biennium state budget deficit of between $161 million and $200 million plus a legislative mandate to reduce the state fiscal 1991 budget by $50 million and the fiscal 1992 budget by $100 million. The shortfall could be handled by use of the state's $550 million budget shortfall or 'rainy day' fund. This is indeed its purpose, however, this option would create a sizeable shortfall in the next biennium which would still have to be addressed by tax increases or spending cuts. Unfortunately, LGA and HACA are on the table according to both administration and legislative sources. Cuts in the 1990 calendar year would be particularly onerous because there would be no way to make up the cut since property levies have already been set thus the states budget shortfall would effectively be transferred to cities. Also, by the time a legislative cut would be enacted, the cities will be half way through their budget year, thus, doubling the cut impact. Administration officials are also examining ways to base aid cuts on city reserve levels. Presumably larger aid cuts could be proposed for those cities with larger reserves. It is unclear as to what will be considered reserves, i.e., cash balance as of December 31, or cash minus operating funds until property tax and state aid payments in June, or excess cash in various bonded debt sinking funds, etc. Such action over the long run would be counterproductive since it would encourage higher spending and more borrowing and would likely result in lower bond ratings which in turn would increase the cost of public infrastructure. -5-