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Finance Committee will discuss possible state revenue cuts

WILLMAR -- No one knows for sure how much state aid cities such as Willmar could lose if Gov. Tim Pawlenty reduces December aid payments to help reduce the current $426 million biennium deficit.

But city-by-city estimates issued by the League of Minnesota Cities indicate Willmar's December payment -- which is supposed to be $2,339,315 -- could be reduced anywhere from $93,100 to $495,600.

Mayor Les Heitke says he has asked City Administrator Michael Schmit to prepare some possible local budget cuts for discussion by the Finance Committee on Monday.

The League said many cities have been asking for information about the potential magnitude of state aid cuts. The League believes the governor and legislators are looking at cuts to cities ranging from $25 million to $100 million, a reduction of between 9 percent and 35 percent of the total remaining appropriation scheduled to be paid to cities at the end of the month.

Heitke says rural cities like Willmar, which count on state aid as budget revenue, have already spent the money.

"We get payments twice a year in June and in December. ... The money's been spent and this is to reimburse what we spent over the last six months,'' Heitke said. "For us to make adjustments at this point is difficult without drawing into reserve accounts.''

Local Government Aid is the city's largest revenue stream, accounting for $4,596,086 or 22.1 percent of revenue in the mayor's 2009 budget of $20,842,162.

The governor has the authority to unallot these payments due to the deficit, according to the League.

The governor "is not a big fan of Local Government Aid and he's indicating that Local Government Aid should play a larger role in resolving that state budget deficit,'' Schmit said.

"Whether the Legislature is able to work something out and hold that number down to a more manageable impact to communities remains to be seen, and I don't think we'll know until next week the outcome of that,'' he said.

Heitke and Schmit discussed the effect of possible state aid cuts during Monday night's City Council meeting.

Council member Jim Dokken said a cut of up to nearly half a million dollars is just the beginning, since the state budget for the next two years faces a $5.27 billion deficit.

"We need to be looking very closely at what we're doing,'' Dokken said. "We can't wait too long. We need to be looking very closely at the budget and start making some possible decisions now for the future and not wait till we get the exact number because we know it's going to be probably large in 2009 or 2010.''

Heitke said the federal government has some influence on funding that comes to states and the states have influence on what comes down to counties and cities.

"But you're right,'' he said. "The bigger issue seems to be what the Legislature is going to do in this next session that affects the biennium, which starts on July 1, 2009. We just have to let our senators and representatives in St. Paul do their job and try to coach them on what our concerns are.''

In other business, the council:

- Met briefly with congressional lobbyist David Turch and Kodiak Hill-Davis of David Turch and Associates of Washington, D.C. Hill-Davis said she and Turch were in Willmar this week to discuss with officials the city's federal funding needs for 2009.

- Was told by City Clerk Kevin Halliday that Double D Club owner Duane Duenow has fulfilled his obligation to hire a new club manager and has paid the $2,000 second half payment of his $4,000 liquor license. The club failed a Police Department liquor compliance check on Oct. 24 in selling or giving intoxicating liquor to underage persons. It was the club's first license violation and Duenow will enroll his employees in a Police Department training program.

- Authorized Heitke and Schmit to execute an agreement for the city to receive a $500,000 Public Facilities Authority grant from the Minnesota Pollution Control Agency for the new wastewater treatment plant.

- Denied a special event permit for The Oaks at Eagle Creek to distribute alcohol at the Civic Center Arena during a Curling Club invitational tournament Jan. 9 and 10. Halliday said the Civic Center ordinance limits sale of alcohol to conventions and banquets, corporate groups and big events, and not at amateur sporting activities. He recommended the permit be denied. City Attorney Rich Ronning said state statute makes clear the city cannot issue a license to serve alcohol at amateur athletic contests at the Civic Center.

- Was told by Heitke that the city had received a plaque for 25 years' membership in the National League of Cities. Also, Heitke presented plaques of appreciation to outgoing council members Steve Gardner and Cindy Swenson for four years of service on the council.

- Extended the completion date in the contract with Kuechle Underground of Kimball for the Westwind Estates street project from Oct. 30, 2008, to June 12, 2009. City officials said wet soil conditions prevented the work from being completed on time.