ST. PAUL - The cuts are beginning.
Gov. Tim Pawlenty today announced plans to cut $271 million out of the state budget, including reducing $66 million from payments that cities and $44 million that counties had expected to receive a week from today. Cities planned to receive $280 million and counties $165 million.
Aid to cities with 1,000 or fewer residents will not be cut.
Other cuts Pawlenty announced to balance the current budget include:
-- $73 million to human services programs
-- $40 million to the University of Minnesota and Minnesota State Colleges and Universities systems
-- $40 million through 10-percent reductions in most state agencies
-- $1.5 million to 21st Century Minerals Account
Pawlenty balanced the state budget without cutting military, veterans, public safety and K-12 education programs.
"Families and businesses across the country are tightening their belts and government needs to do the same thing," Pawlenty said in a statement. "As much as possible, we have worked to minimize the impact of these cuts by reducing accounts with surplus balances or excess funds that have not been spent or committed to projects."
The Republican governor was forced to make the cuts - officially known as unallotment - after a recent report by his administration that the state otherwise would end the fiscal year on June 30 with a deficit.
Under state law, the governor must drain the state budget reserve before he makes cuts to balance the budget. He did that, then started cutting.
Pawlenty's actions today totaled $426 million. The official deficit is $426 million for the rest of the current budget, but State Economist Tom Stinson has said the deficit actually could grow up to $70 million in coming months.
The current budget problem is just part of the whole picture. In total, the state budget is nearly $5.3 billion unbalanced. The Legislature and Pawlenty will work together to balance the next two-year budget once lawmakers return to St. Paul on Jan. 6.
With local governments taking a hit, some city officials warned that public safety and other services would suffer.
"There may be cities of all sizes that really struggle to deal with this cut," said Gary Carlson of the League of Minnesota Cities.
Payments come so late in the cities' fiscal year that ends Dec. 31, he added, that cities have little flexibility.
"Some of our members have really raised some huge concerns," Carlson said.
After hearing that about 500 cities smaller than 1,000 could not handle the cuts, Pawlenty exempted them. That leaves 349 cities that will face aid cuts.
The Dec. 26 aid payments are half of what local governments receive from the state each year.
Executive Director Jim Mulder of the Association of Minnesota Counties said his members will not complain.
"We understand we have to be part of the solution," Mulder said. "We have decided as an association that we are not going to spend a lot of time complaining. Nobody wants this ... but it is a reality. So let's spend our efforts finding solutions."
Mulder said that in a Thursday meeting with Pawlenty, the governor promised to "try to hold down" local government cuts, at least in the current budget. It will be another month before the governor proposes budget for the next two years; that budget also is expected to include local aid cuts.
"The governor talked about what we are doing now is not sustainable," Mulder said. "We agree with this. The counties are going to have to change how we do business."
Mulder said a few small counties may struggle with the short-term budget fix, but most have enough reserves to make it through the end of the fiscal year.
A St. Paul firefighter who called Pawlenty's Friday radio show said that state payments to local governments will affect public safety, one of the governor's priorities. However, Pawlenty said, local governments do not need to take money away from public safety programs right away.
"If the first thing you have to do is lay off or affect public safety, that would be a misplaced priority in my view," he said.
Pawlenty suggested that cities and counties take money out of reserves before making public safety cuts, then make cuts in programs other than public safety.
The governor said local government payment cuts are not a major percentage of what they receive from the state.
"In most cases, dramatically less than 5 percent" of state payments will be lost, he said.
Pawlenty said cuts are needed because state revenue has fallen after the Minnesota economy "tanked."
"Unlike the federal government, the state of Minnesota has to balance its budget," Pawlenty said.
Already, Pawlenty has ordered his agencies to cut spending 10 percent for the remainder of the current fiscal year and many vacant state jobs are going unfilled.