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�4N, <br /> STATE OF MIA1wscr A <br /> OFFICE OF THE GOVERNOR <br /> NEW <br /> RUDY PERPICH ST. PAUL 55155 <br /> GOVERNOR <br /> June 27, 1983 <br /> To Local Units of Government: <br /> The purpose of this letter is to provide information on the <br /> possibility of future budget reductions and actions to be <br /> taken if revenue shortfalls should occur. <br /> I BUDGET STABILITY <br /> During the 1983 legislative session I recommended, and the <br /> Legislature approved, a $250 million budget reserve. In <br /> addition, the General Fund fund balance at the end of the <br /> j F.Y. 84-85 biennium is forecast to be approximately <br /> $100 million. Legislation was also passed which suspends <br /> indexing in the event of a shortfall. Before indexing may <br /> be suspended, the fund balance and budget reserve must be <br /> used. If a shortfall should occur, the above items would <br /> cover the first $433 million. <br /> The Minnesota economy is finally showing signs of recovery. <br /> This, along with the actions taken by the 1983 Legislature, <br /> has returned stability to Minnesota's budget. There is, however, <br /> a note of caution. Current budget estimates include forecasts <br /> of a recovery of the Minnesota economy. If the recovery <br /> should stall, then a budget shortfall and unallotments could <br /> I occur. <br /> I <br /> REVENUE SHORTFALL - ACTIONS TO BE TAKEN <br /> I <br /> If the Department of Finance forecasts a revenue shortfall, the <br /> following actions would be taken in the order listed. <br /> • First, the budget balance would offset the first $100 <br /> million of any shortfall. <br /> • Second, with the advice of the Legislative Advisory <br /> Commission, the budget reserve would be used to offset <br /> the next $250 million in shortfalls. <br /> -over- <br /> AN EQUAL OPPORTUNITY EMPLOYER <br /> _ - .'M . <br />