NEW LONDON -- With cuts in Local Government Aid looming, the New London City Council began discussions Wednesday about how to combat the imminent loss of funding.
According to City Administrator Trudie Guptill, the LGA makes up about 55 percent of New London's budget. By the end of 2009, Guptill said, the city could lose about $33,800 in state funding as lawmakers attempt to balance a record state deficit.
In December, New London lost $24,550 in LGA after Gov. Tim Pawlenty introduced unallotments on the state funding. According to the governor's recently proposed budget plan, Guptill said, New London will lose up to 11 percent of LGA in 2009 and up to 24 percent in 2010. By 2011, she said, the could have lost up to $75,600 during the previous two years.
With those statistics in mind, the council began discussing budget reductions to cover the projected loss. Those ideas included abolishing lifeguard service at Mill Pond, cutting down on crack-filling city roads and decreasing funding to Kandiyohi Area Transit.
In total, $39,600 could be saved through proposed reductions, which total didn't include the council's decision last month to freeze wages for city staff.
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If LGA is cut, Guptill said, the city will also have the ability to raise its tax rate. However, in today's economic times, the council is slow to go that route.
The council did debate a proposal by Councilman Kevin Dittbenner that would affect water and sewer rates.
According to Dittbrenner, the city's water fund in 2008 cleared a projected $2,981 surplus by more than $1,700. Conversely, the sewer fund was about $6,000 short of the projected surplus.
Dittbenner suggested the city decrease the water rate by 5 cents per 1,000 gallons and increase the sewer rate by 5 cents per 1,000 gallons. The offsetting rates would keep monthly payments the same, Dittbenner said, but would make a difference in the city's respective funds for the utilities.
"If it was a better year, I would support a 5 percent increase on both, but it's not a better year," Mack said. "We're in the middle of a deep recession, if not a depression."
After some discussion, the council supported Dittbenner's plan with a 5-0 vote.
