Agenda - Council - 02/25/1986 - Laserfiche WebLink

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STATE BUDGET CRISIS AT A GLANCE THE SITUATION The state is facing a $700 million shortfall in revenues this biennium. As a result it is proposed that budgets approved last spring be cut $380 million and most of the budget reserve be used. THE GOVERNOR'S RECOMMENDATIONS Cut LGA to cities by $23.1 million (8.1%) in 1986 Cut homestead credit to cities $9.3 million (8.78%) in 1986 Change state payment schedule Freeze the homestead credit appropriation in 1987 and grant only a 3% increase to LGA in 1987 Restore education cuts and the budget reserve if additional revenue is received Abolish levy limits WHAT LEGISLATORS NEED TO KNOW The basics: Cities are required to budget on a calendar year. Because cities can not increase levies for 1986 or pass the cuts on to a lower level of government, they would have to make significant budget cuts in the next nine months. The impact these cuts will have on your city. Will you be laying off staff, increasing your short term borrowing? Your city's current fiscal situation. How are you dealing with the major (and unpredictable) cuts in federal revenue sharing? Is your assessed value increasing or decreasing? Are you subject to levy limits? if so, have levy limits prevented you from planning for this sort of budget problem? Ask that levy limits be repealed. Do you currently do short-term borrowing to pay your costs until you receive property tax and state payments in the second half of the year? If, as proposed by the governor, the state changed to two payments of LGA and homestead credit in July and December, would you need to do furlher short-term borrowing? 1987 will be a very tough year for cities in general, given the complete elimination of federal revenue sharing, delayed necessary costs due to 1986 cuts, costs of implementing comparable worth, and inflation. The governor has recommended only a three percent increase in local government aid and no increase in homestead credit funding. Is your assessed value growing? Do you anticipate having to seriously consider significant property tax increases? Your legislators are not all-knowing. They need to hear from you on these issues. For the addresses and phone numbers of your legislators, see the Legislative Bulletin No. 1, Feb. 7, 1986. Or call House information, (612) :296-2146, or Senate information, (612) 296-0504.