It’s not much fun these days to serve on a city council. Still reeling from the state’s second payment reduction in a row and bracing themselves for a third, officials in Lauderdale, Falcon Heights and St. Paul will spend August and September preparing painful budget proposals and most likely boosting property taxes for 2010.
The effects of recent budget shortfalls are subtle so far, city leaders say. Grass doesn’t get trimmed as often in the parks; permits take a little longer to turn around; a question doesn’t get answered at city hall quite as quickly as it once would have. Children make do with old playground equipment because its replacement has been put on hold. There are two summer community events instead of the usual three.
But as city council members in Lauderdale, Falcon Heights and St. Paul sift through piles of reports and juggle scenarios, it’s getting harder to find services that can be cut. Cities have to set next year’s tax levies at their September meetings, and they say we can all expect at least a moderate increase to compensate for cuts in local government aid (LGA).
As St. Paul’s Ward 4 City Councilmember Russ Stark pointed out, the tax increases will be felt more keenly in St. Paul neighborhoods with relatively stable property values — including much of Ward 4.
The city sets an overall levy, the county assesses values and the state has detailed rules about how the tax burden falls, based on each property’s value and use. Stark said home values have fallen by as much as 50 percent in other parts of the city.
So if St. Paul’s levy goes up, a home that has lost little value will shoulder a greater proportion of the overall levy and could see a noticeable increase in 2010 taxes — especially when county and school district levies, both larger than the city’s, are added in.
Cities receive LGA payments from the state twice a year to supplement their property tax and other revenues and to make sure each municipality has what it needs to maintain basic services while keeping property taxes steady.
LGA was cut at the end of 2008, when Gov. Pawlenty reduced December payments to balance a budget shortfall, and then again in July of 2009. Now local officials are bracing for another cut this December.
Always controversial, LGA has become a hot potato during the economic downturn. Critics say cities should break their dependence on it.
“We’d love to,” said Falcon Heights City Manager Justin Miller, who said he’d like to know how much money is coming in and then not have it taken away just days before bills are due, as it was in December and again in July. But with two-thirds of Falcon Heights occupied by the tax-exempt University of Minnesota and Fairgrounds, it’s impractical to consider running the city on property taxes alone, he said.
Falcon Heights has already cut City Hall staff from six positions to four, Miller said. They’ve stopped publishing newsletters and replaced them with electronic communications, which are cheaper but probably less effective.
“You’ll never get as much coverage as if you’d mailed it to every house,” Miller said.
Falcon Heights staff salaries are frozen at 2008 levels, and money to refurbish a fire truck was diverted to the general fund. Possibilities for savings in 2010 include staff reductions for parks and public works, which could mean warming houses at ice rinks wouldn’t be staffed, or firefighters wouldn’t staff public events such as the ice cream social or snow would pile up higher before being removed.
Miller’s list of possible budget revisions, from which the City Council will likely draw, also includes more dramatic cuts, such as eliminating parks and recreation programs or reducing public works staff by one full-time position.
“I’d challenge anybody to look at our budget and find any fluff,” Miller said.
Lauderdale City Manager Heather Butkowski, also operating on reduced staffing, said, “We live pretty well within our means.” She said capital improvements are on hold unless there’s a safety issue or a threat such as water damage that would undermine a structure.
“The hard part is you only find out about your unallotment midway through the year,” she said.
The December 2008 cut was a last-minute surprise; the July unallotment was announced in May but not specified until early July; the December 2009 payment is expected to be a loss from cities’ long-range expectations.
Lauderdale City Council-member Lara MacLean said the residential nature of her suburban city means home-owners will foot any increase in tax bills, but she and her colleagues hate to see services cut much more.
For example, she said, they contract police services from the city of St. Anthony, an arrangement shared by Falcon Heights. It’s only recently that Lauderdale has had an officer always on duty.
“I grew up here,” she said, “and they’re the best police force we’ve ever had. The kids know them. They get out of their cars to talk to us.” She said she wouldn’t want to go back to a part-time police presence.
MacLean said her constituents are comfortable but far from wealthy. “I just don’t want to see the citizens here have a huge tax increase,” she said.
And if the city nudges its levy upward this year, as she expects, she’d feel better if she thought the worst was over. “That is going to be my big question,” as she grapples with the 2010 budget, she said. “What if they cut us even more?”
Terry Speiker, director of public affairs for Ramsey County, said the Ramsey County Board will begin looking at its 2010-2011 budget in September. She said that although counties, like cities, receive state aid, “a lot of it is specific to programs we deliver. We are still trying to ferret out what it’s going to mean.”
Speiker said federal changes in reimbursement formulas have helped counties, but the governor’s unallotments removed that advantage. She said demand is increasing in human services and workforce assistance. “Requests for assistance have gone through the roof,” she said.
St. Paul City Council-member Russ Stark said the year’s losses of LGA, compounded by inflation, add up to “a big hit” to the city’s budget. He said the city absorbed December’s unallot-ment with a hiring freeze but will have to resort to layoffs and other measures as they approach the 2010 budget.
“We’ve got more than $20 million to make up for,” Stark said.
St. Paul will likely see reduced police services, Stark said, meaning fewer officers will be on patrol and response times will be longer. Mayor Chris Coleman is scheduled to announce his budget proposal for 2010 on August 11.
Stark said he expects libraries and recreation centers to be hit hard. He is participating on a citizen task force to find a way to keep the Hamline Branch Library open, possibly through a partnership with a nonprofit. A similar effort is under way for the South St. Anthony Recreation Center. Griggs Recreation Center is also in danger of losing staff, Stark said.
Stark said citizens may not notice some effects of the current belt-tightening but will wind up paying for them for years.
For example, he said, the city attorney’s office will likely have its staff reduced, and when someone brings a lawsuit against the city, the staff has only so much time to comb through the details of the case, looking for defenses and sharpening arguments. Smaller staff could mean more expensive settlements, Stark said, turning short-term savings into long-term loss.
City councils will begin considering 2010 budgets in August, and all meetings are open to the public. Each city sets its maximum levy in September, then refines its 2010 budget by working within that levy limit.
Lauderdale Councilmember MacLean said she encourages neighbors to attend meetings and bring their questions to the floor.
“The meetings are kind of dry,” she admitted, but she’s still surprised no one has asked her what the city will do about the loss of local government aid.
“They are going to be feeling it,” she said, “more and more and more.”
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