Agenda - Council - 11/10/1981 - Laserfiche WebLink

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,, ea§ue of m nnesota c t es + · .................. October 27, 1981 ',~ ~,,~ · .~ ~,~ ,.-~ ,, ~.~.,,, TO: Mayors, Managers and City Clerks IFROM: IRE: Donald Slater, Executive Director Peggy Flicker, Legislative Counsel Status Report: The State Pinancial Crisis and Its Direct Impact on Your City LOCAL GOVERNMENT AIDS (LGA) PAYMENT DELAYS CERTAIN; CUTBACKS LIKELY State Financial Picture Worsens - Cash Plow and'Deficit'Problems I It is now clear that the state faces a huge deficit in the current biennium. State spending obligations are now estimated to exceed projected state revenue collections Iby at least 600 million dollars. In addition, the state's cash flow problem has not been solved, despite increased short-term borrowing by the state. A special session will be called - probably in mid-November. ! How Your City_ is Affected b7 the State Crisis iI. 1981 LGA Payment Delay The State Revenue Department announced late yesterday that the November 15, 1981 LGA payment will not be made on time. Unless the Legislature acts to solve or alleviate the cash flow problem, it is likely that cities' entire November and December, 1981LGA payments will not be made until 1982. And depending on legis- lative action to solve the deficit problem, it is also possible that those payments, when made, will be cut. II. LGA Payment Cuts It is very possible that your city's 1982 LGA payment (already planned for in your 1982 budget) could be cut by as much as 20%. Unlike the 1981 round of cuts, your city will not automatically have the option to levy property taxes to make up for some or all of the cuts. The Legislature would have to both amend the levy limit law and make changes in the way property taxes are paid and administered in order to allow for a levy. The politics and practicalities are such that your City could well have to deal with an unrecoverable cut in your 1982 budget. OVER 300 hanover building, 480 cedar street, saint paul, minnesota 55101 [612) 222-2861