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

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~ptions the Governor and Legislature Ma~ Consider I I I I I. 'Cash Flow 1. Treat Local Governments Equally Minnesota cities are now being told to bear most of the burden of the cash flow problem, since the LGA program is of greatest significance to cities. School aid payments are not being delayed because the Governor has inter- preted the law prohibiting him from unilaterally cutting school aids to also forbid a payment delay. The legislature and Governor could at least spread the burden of the cash flow problem and be more equitable by amending that law at the special session and delaying payments to all types of local government. I I Give Cities More Tools to Handle Local Cash Flow Problems If LGA payments must be delayed into 1982, the Governor and Legislature may alleviate some hardships by allowing cities to borrow in anticipation of receipt of LGA. Other actions may also need to be taken to allow cities to cope, legally and practically, with the delays. I I I I I I I 3. Raise Revenues Because of timing considerations, it may as a practical matter be too late to alleviate the current cash flow problem through some sort of revenue increases or speed-ups. However, this alternative may be considered for the immediate problem and certainly ought to be considered in regard'tO preventing a similar situation in 1982. II. 'Deficit 1. State Budget Cuts (Local Tax Increases?) 4 The only place the state can make any significant expenditure savings is in the transfer payments it makes to local governments - school aids, home- stead credit, LGA, etc. If the budget is to be balanced only through expenditure cuts, then cities will be hard hit. LGA cuts would have to be about 20%, and other cuts might come in the 1982 homes'read credit- payments.' It would be possible to accompany LGA and homestead credit cuts to cities with additional special authority to raise some or all of the lost state revenues from local property taxes, However, there are major political and practical problems with obtaining any ability to raise local taxes for 1982. I I I 2. State Revenue Increase Given the staggering size of the projected deficit, more and more people are discussing state revenue increases as at least a partial solution to the budget problem. Without any state revenue increase the impact on many cities' budgets of severe state cuts could be devastating. (more on page 3) =2-