INFORMATION #1 04-19-2010o~
j,EAGUE of
[ytINNESOTA
CITIES
Apri18, 2010
RECEtV ED APR o 91010
Dear Mayors and Chief Appointed Officials:
~~a
CONNECTING & INNOVATING
SINCE 1913
Last week Governor Pawlenty signed into law the first supplemental budget bill, Chapter 215 (HF
1671).. This week's Cities Bulletin includes an expanded description of this new law. Among other
provisions, it will further reduce Market Value Homestead Credit (MVHC) and Local Government
Aid (LGA) payments by $52.5 million in 2010. This is on top of the $128 million in cuts to those
two programs that cities have already taken into account in their adopted 2010 budgets.
While these latest cuts are not welcome news, we know the reductions could have been far worse.
You may recall that the. Governor initially recommended $125 million in cuts to MVHC and LGA
in his supplemental budget proposal while the House Tax Chair introduced a bill that would have
cut cities by $115 million. By comparison, the cuts as they currently stand are much less than they
might have been. Clearly, our collective efforts to explain the impacts of such deep cuts helped to
change minds. If you have not already done so, a "thank you" to those legislators who supported
this compromise would be appropriate.
However, the signing of Chapter 215 does not. eliminate the possibility of additional cuts for cities
in 2010. The Legislature and Governor have yet to agree on the second supplemental budget bill
which will affect the education and health and human services budgets. Likewise, Chapter 215
was based on the expectation that the state will receive an additional $400 million in Medicaid
assistance from. the federal. government. If the Governor and Legislature cannot agree on the
remaining. cuts necessary to balance the budget and/or if the federal Medicaid assistance is not
forthcoming, the Legislature will have to revisit its earlier actions and possibly' increase budget
cuts already included in Chapter 215.
Even cities that no longer receive MVHC and LGA could be affected if the. Legislature considers
cuts to other aid and credit programs such as PERApenson aid or police and fire aid, programs
that all cities currently receive. That, in fact, has already happened this session; $10.5 million was
diverted from the Fire Safety Account, a dedicated source of training dollars for fire departments
statewide, as part of Chapter 215.
I am, therefore, taking this unusual step of writing to ask that you convey to your legislators the
importance of not further reducing city programs - in any form -during the final weeks of the
session. Including the cuts authorized in Chapter 215, cities have lost over $300 million in aids
since the end of 200$.. And, as it currently stands, the state faces a $5.8 billion. deficit in the next
biennium beginning July 1, ZOi 1 meaning the likelihood of even more cuts to these aid programs
145 UNIVERSITY AVE. WEST rxorrE: (651) 281-1200 FAX: (651) 281-1299
ST. PAUL, MN 55103-2044 rots FREE: (800} 925-1122 WEB: WWW.LMC.ORG
Mayors and Chief Appointed Officers
April 8, 2010
Page 2
in the 2011 legislative session. Please remind your legislators of the difficult choices your city
councils have already made and the impact these latest cuts will have on your residents and
businesses.
The League will continue to make this point in coming weeks, but your advocacy may be the
difference between what is now law and even more severe reductions.. If you have questions or
concerns about the budget bill or the possibility of additional cuts, please feel free to contact us at
any time.
Sncerely,,y~
Jim Miller
Executive Director