INFORMATION #2 02-08-1993
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League of Minnesota Cities
3490 Lexington Avenue North
St. Paul, MN 55126
(612) 490-5600
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INFORM/\TION
Governor's Proposal Means Layoffs, Service Cuts, Property Tax Increases
February 2, 1993
Dear City Official:
The next few days will provide a key opportunity to make your views known to legislators. They
are taking a long weekend away from Saint Paul. One purpose for this break is to allow them
time to go home and talk with constituents about the Governor's budget proposal.
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The centerpiece of the Governor's proposal is a public employee salary freeze that supposedly
will save the state nearly $600 million. But city officials know that freezing salaries is unrealistic
because of existing contracts, pay equity requirements enforced by the Governor's own
administration, escalating health insurance costs, and other reasons. The Governor has not offered
any help or proposed any tools for government officials to actual implement a salary freeze.
The only conclusion one can reach is that he is not serious about freezine salaries. Instead.
his proposal really means layoffs. cuts in services. and property tax increases. To be fair to
the public, we must begin discussing the proposal in those terms. Unless we can convince
legislators, the public and the press that this proposal will force local government to cut services,
layoff employees and raise local taxes, the state will again fail to honor its financial
commitments and again will undermine the fiscal stability of cities.
The enclosed sheet lists four major concerns we at the League have about the Governor's
proposal. You may have others. In any case. it is vital that you contact your leeislators over
the next few days and tell them what you think. Also talk to your local press about these
issues and the practical difficulties you would have freezing salaries. And finally, if you are able
to cut employee salaries, do you believe the money saved locally should go back to the state, or
should it stay in your community as property tax relief!
Again, your help at this time is vital. Please give me or Gary Carlson a call if you have any
questions, or get feedback from legislators you think we should hear.
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Don Diddams
Senior legisl'!tive representative
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3490 Lexington Avenue North
St. Paul, MN 55126
(612) 490-5600
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League of Minnesota Cities
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Governor's Budget Breaks the Trust
. The Governor's proposal means service cuts, layoffs and property tax
increases. Saving $600 million through a salary freeze is not realistic
because the proposal does not include a suspension of PELRA. pay equity.
or any of the other tools government managers would need to actually freeze
salaries. These may not be good ideas. Nevertheless, until the Governor's
proposal includes those components, it is nothing more than another proposal
for cuts in services, layoffs, and property tax increases. It is unfair to the
public to pretend that this money can be saved without serious cuts in
services and costs to taxpayers.
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The Governor's proposal would destroy the Local Government Trust
Fund (LGTF). He has proposed taking nearly $52 million from the LGTF
to pay for other state spending. In fact he has proposed that any money left
in the trust fund should automatically be transferred to the state's general
fund. Under this proposal the LGTF as a separate trust fund dedicated to
property tax relief has no meaning.
. The cuts in LGA and HACA for 1993 once a2ain break the trust with
cities. The Governor has proposed cutting this year's LGA by $10 million
from the amounts certified to cities. 1993 HACA to cities and counties would
be cut by an additional $9 million. This proposal comes only a month after
cities set their levies and budgets based on LGA amounts promised by the
state. State revenues are expected to grow by over $1.3 billion. Why must
cities take a cut?
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The fundin~ for LGA for 1994 is inadequate. LGA should grow along
with revenues into the LGTF. Growth in LGA is essential to prevent property
taxes from escalating faster than they have already. Although we are pleased
that the Governor has not proposed eliminating LGA, we are disappointed
that he has frozen it at 1992 levels. With state revenues increasing, it is
unfair to property taxpayers that city revenues should be frozen, causing
property taxes to increase.
February 2, 1993