5.12 SR 04-05-2010Item # 5.12.
.ver
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: Apri15, 2010
SUBJECT: 2010 Budget Update
The Legislature recently approved and the Governor signed a budget balancing bill that
includes reductions to local government aids. Although the total reduction to cities is
significantly less than the Governor's proposal, the reduction to Elk River is the same in
either case. Elk River will lose an additional $186,915 of market value homestead credit aid
payable in 2010. The City does not have an opportunity to make up for this revenue loss
through additional taxes in 2010.
Fortunately, after the City's budget was adopted, the Sherburne Wright Cable Commission
approved extending payment of the franchise fees for an additional three quarters in 2010.
As you may recall, the Commission unexpectedly approved payment of two quarters of
franchise fees to its members in 2009 because of the financial difficulties its member cities
were experiencing. Historically the Commission has retained all of the franchise fees. The
payment to Elk River in 2010 is estimated to be $120,000.
In addition to the franchise fee revenue, fuel costs are estimated to be approximately $40,000
less than budgeted due to the state fuel contract price. These two items will offset most of
the additional aid loss. Further, the Council Contingency budget was increased by $43,000
(the result of budget reductions and adjustments) in anticipation of a further reduction in
state aid. With the Council Contingency adjustment, the additional aid loss is fully covered.
You may recall that when the budget was adopted $98,300 of expenditures were left in the
budget but those funds were not to be spent until the status of state aid reductions was
known. Of that amount, $14,350 was for staff training, $7,350 was for recreation supplies
and programming, $13,000 was for delaying hiring of the engineering tech I, and $63,600
was for Microsoft licensing upgrades and training. At this time, I am suggesting that
department heads be allowed to access the training and recreation funds totaling $21,700
since the state aid cut is fully funded. The remaining two items totaling $76,600 will be held
until later in the year when we are confident that funds will be available to cover those items.
House Research Department
3/28/2010
Run: 1ga10cuth1671 cc
2010 City cuts under Governor's Proposal vs the HF 1671 Conference Committee
Report
The attached run shows a summary of
1. the certified Pay 2010 LGA and MV credits before any reductions,
2. the Pay 2010 LGA and MV credit unallotments announced in January
3. an estimate of the supplemental cuts to Pay 2010 aids and credits included in the governor's supplemental
budget proposal; and
4. An estimate of the supplemental cuts to Pay 2010 aids and credits under H.F. 1671, the conference committee
report.
The Governor's Pay 2010 unallotments do not apply to cities with a 2007 population less than 1,000 if their adjusted
net tax capacity per capita was less than the city average. For all other cities the unallotment was 7.644 percent of their
Pay 2009 levy plus aid base with a maximum loss of $55 per capita. The unallotment was made first to LGA, and then
if necessary to MV credit.
The governor's proposed additional Pay 2010 reductions apply to all cities. The reduction, which is in addition to the
unallotment amounts, is equal to 8.158 percent of their Pay 20101evy plus aid base. The reduction is made first to
LGA, and then if necessary to MV credit.
The supplemental cuts proposed under H.F. 1671 also apply to all cities and are equal to 3.4287 percent of each city's
20101evy plus aid base. The reduction is made first from MV credit, and then if necessary, from LGA.
• Column 1: Pay 2010 certified LGA plus 2010 MV credit estimate
• Column 2: Pay 2010 LGA and MV credit losses due to unallotment
• Column 3: Pay 2010 LGA and MV credit losses under the governor's supplemental budget proposal
• Column 4: Pay 2010 LGA and MV credit losses under HF 1671
• Column 5: The aid and credit losses per capita under the Governor's supplemental budget
• Column 6: The aid and credit losses per capita under the HF1671 proposal
For further information contact: Pat Dalton 651-296-7434
"°~Se Resear°" Dept. 2010 City Cuts under Governor's LMC City Cluster Listing
Run:LGA10cuth1671cc Page 7 of 25
3/28/2010 oz:16 PM Proposal and under HF 1671., the
conference committee report
Cityname: Certified 2010 LGA Governor's 2010 Governor's Suppl. HF1671 Gov. Suppl. HF1671 Suppl.
+MV credits Total Unallotments 2010 cuts Supplemental cuts cuts/capita cuts/capita
(2) (3) (4) (5=3/pop.) (6=4/PoP)
(1)
DETROIT LAKES CI 1,167,847 283,755 334,179 140,451 39 16
GRAND MARAIS CI 218,576 73,647 79,355 33,352 56 24
GRAND RAPIDS CI 1,731,635 483,104 519,912 218,512 54 23
GRANITE FALLS CI 897,997 155,872 176,754 74,288 59 25
HINCKLEY CITY OF 301,191 54,980 62,822 26,403 44 18
HOYT LAKES CITY 558,150 101,475 183,991 51,352 100 28
INTL FALLS CITY O 4,307,324 345,565 498,007 173,012 81 28
ISANTI CITY OF 666,065 210,903 219,526 92,264 40 17
LITTLE FALLS CITY 2,745,236 396,952 433,844 182,339 52 22
MAPLE LAKE CITY 551,928 97,003 103,691 43,580 52 22
MORA CITY OF 860,826 103,600 113,914 47,876 31 13
PARK RAPIDS CITY 603,431 172,541 201,486 84,682 58 24
PEQUOT LAKES CI 152,626 109,670 42,956 42,956 22 22
PERHAM CITY OF 674,909 124,155 138,141 58,059 50 21
PINE CITY CITY OF 615,475 118,232 133,119 55,948 40 17
PINE RIVER CITY O 292,409 0 51,468 21,631 56 24
PRINCETON CITY 880,941 220,800 239,852 100,807 53 22
ROSEAU CITY OF 770,082 131,638 142,761 60,001 50 21
RUSH CITY CITY O 742,072 80,988 91,705 38,543 30 13
WAITE PARK CITY 376,081 370,095 5,986 5,986 1 1
WALKER CITY OF 179,191 61,875 94,285 33,208 79 28
WARROAD CITY OF 875,057 94,710 126,536 47,964 74 28
Group Total 22,gg1,811 4,494,305 4,775,301 1,961,463 47 19
Urban Fringe
ALBERTVILLE CITY 112,380 104,307 8,073 8,073 1 1
ANNANDALE CITY 459,729 107,189 124,437 52,299 41 17
BAXTER CITY OF 197,524 197,437 87 87 0 0
BECKER CITY OF 67,887 64,890 2,997 2,997 1 1
BUFFALO CITY OF 811,800 388,023 423,777 192,739 30 14
BYRON CITY OF 421,798 175,550 192,484 80,898 40 17
CAMBRIDGE CITY 1,039,228 403,658 444,050 186,628 58 24
CLEARWATER CIT 245,464 77,990 98,888 40,208 69 28
DELANO CITY OF 230,595 170,380 60,215 60,215 11 11
EAST GULL LAKE C 6,335 5,344 991 991 1 1
~..~ ELK RIVER CITY OF 1,094,813 907,898 186,915 186,915 8 8
HANOVER (JT) 225,456 112,594 112,862 50,042 42 19
HERMANTOWN CIT 719,301 257,007 312,623 131,391 34 14
House Research Department
3/25/2010
Run: LGAllcutl671conf
2011 LGA, and tota12011 city aid and credit cuts under the HF 1671
conference committee report and the governor's proposal
The attached run shows the LGA under current law and under both the conference committee
report for HF 1671 and the governor's proposal. It also includes the projected Pay 2011 MV
credit cuts, and total aid and credit cuts under each proposal.
HF 1671 reduces the LGA appropriation permanently from $558 million annually to $527.1
million annually. The cut is distributed via the formula but the calculation of the caps on
minimum and maximum increases for each city remain the same but use 2010 certified aid minus
the 2010 supplemental LGA cuts as the starting point from which to calculate allowed increases
and decreases. It also makes the governor's January MV credit unallotments permanent. The
conference committee also allocates $106,964 of the Pay 2011 appropriation only, to the city of
Houston to compensate it for the 2008-2010 governor's unallotments. Houston is the only city
subject to unallotments that had a Pay 2008 population less than 1,000.
The LGA formula remains the same under the governor's proposal -the differences are only in
the appropriation level which is set at $337.6 million, and some differences in how 2011 caps on
increases and decreases are determined. For Pay2011:
• The minimum aid for cities of 2,500 population or more, is equal to its Pay 2010 certified
LGA (before reductions) minus the lesser of (i) $125 per capita or (ii) 50% of its Pay
2010 net levy.
• The minimum aid for cities less than 2,500 population, is equal to its Pay 2010 certified
LGA (before reductions) minus the lesser of (i) $125 per capita or (ii) 40% of its Pay
2003 LGA.
The governor also makes all Pay2010 city MV credit reductions, from both the unallotments, and
his supplemental cuts, permanent beginning in Pay 2011.
• Column 1: Pay 2011 LGA under current law
• Column 2: Pay 2011 LGA under HF 1671 proposal
• Column 3: Projected 2011 MV credit cut under the HF 1671 conference committee
report
• Column 4: Tota12011 LGA and MV credit cuts under the HF 1671 conference
committee report
• Column 5: Pay 2011 LGA under governor's proposal
• Column 6: Projected 2011 MV credit cut under the governor's proposal
• Column 7: Tota12011 LGA and MV credit cuts under the governor's prop
For further information contact: Pat Dalton 651-296-7434
House Research Dept.
Run: LGA11 cut1671 conf
3/25/2010 05:58 PM
Cityname: Estimated 2011
LGa - curr.law
DETROIT LAKES CI
GRAND MARAIS CI
GRAND RAPIDS CIT
GRANITE FALLS CI
HINCKLEY CITY OF
HOYT LAKES CITY
INTL FALLS CITY O
ISANTI CITY OF
LITTLE FALLS CITY
MAPLE LAKE CITY
MORA CITY OF
PARK RAPIDS CITY
PEQUOT LAKES CI
PERHAM CITY OF
PINE CITY CITY OF
PINE RIVER CITY O
PRINCETON CITY O
ROSEAU CITY OF
RUSH CITY CITY O
WAITE PARK CITY
WALKER CITY OF
WARROAD CITY OF
Group Total
(1)
1,053,688
155,889
1,349,614
909,988
318,679
472,918
4,184,197
536,129
2,544,084
539,153
854,519
451,727
74,995
555,911
580,538
263,980
775,287
693,097
753,767
161,280
142,127
847,195
20,668,527
2011 cuts to LGA and MV Credits
under HF 1671 conference
comitteee and Governor's Proposal
HF 1671-2011 HF 1671 -2011 Total HF1671- Gov. 2011 LGA
LGA
(2)
983,362
155,889
1,349,614
846,837
296,611
443,894
3,994,769
499,127
2,401,852
501,766
795, 328
451, 727
74,995
555,792
540,426
247,854
721,736
672,164
726,402
161,280
132,355
809,963
MV cred. cuts
(3)
0
0
0
0
0
0
0
0
0
0
0
0
28,153
0
0
0
0
0
0
141,505
0
0
2011 cuts
70, 326
0
0
63,151
22,068
29,024
189,428
37,002
142,232
37,387
59,191
0
28,153
119
40,112
16,126
53,551
20,933
27,365
141,505
9,772
37,232
(5)
629,150
77,253
705,000
455,896
177,176
271,133
3,284,184
275, 938
1,433,782
374,201
523,665
210,745
29, 338
282,735
297, 223
164,907
397,531
349,847
506,867
65,722
74,525
653,660
19,659,403
169,658 1,178,782 12,640,901
LMC City Cluster Listing
Page 7 of 25
Gov. 2011 MV
credit cuts
(6)
0
0
0
0
0
0
0
0
0
0
0
0
71,109
0
0
0
0
0
0
147,491
15,284
0
Total Governor's
2011 cuts
424,538
78,636
644,614
454,092
141,503
201,785
900,013
260,191
1,110,302
164,952
330,854
240,982
116,766
273,176
283,315
99, 073
377,756
343,250
246,900
243,049
82,886
193, 535
233, 884
8,261,510
Urban Fringe
ALBERTVILLE CITY 0 0 104,307 104,307 0 112,380 112,380
ANNANDALE CITY 403,849 376,037 0 27,812 210,068 0 193,781
BAXTER CITY OF 0 0 197,437 197,437 0 197,524 197,524
BECKER CITY OF 0 0 64,890 64,890 0 67,887 67,887
BUFFALO CITY OF 555,118 539,064 0 16,054 475,871 277,891 357,138
BYRON CITY OF 296,436 276,353 0 20,083 166,227 57,364 187,573
CAMBRIDGE CITY 782,925 753,092 0 29,833 480,947 18,046 320,024
CLEARWATER CIT 208,932 194,528 0 14,404 151,997 0 56,935
DELANO CITY OF 96,481 90,612 42,916 48,785 78,232 103,131 121,380
EAST GULL LAKE C 0 0 5,344 5,344 0 6,335 6,335
--...~.a~ ELK RIVER CITY OF 686,820 686,820 221,078 221,078 686,820 407,993 407,993
HANOVER (JT) 157,479 148,734 0 8,745 88,854 43,798 112,423
HERMANTOWN CIT 516,168 495,431 0 20,737 401,988 0 114,180