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F .... ',~.Y?-"~'-.~,'i.~-'-" ~.':-',· , '~, · <br /> Ouly 24, 1980 <br /> <br />DUe of minnesota oities <br /> <br />TO: <br /> <br />All member city Mayors, Managers, <br />Administrators and Clerks <br /> <br />FROM: Donald Ao Slater, Executive Director <br /> <br />RE: Potential Reduction in State Aid Payments <br /> <br />Minnesota State Finance Commissioner Wayne Burggraaff called League representatives <br />to his office this week in order to confirm the recent newspaper stories concerning <br />a possible shortfall in state revenue because of the recession° The Commissioner <br />indicated that the state has the matter under close observation and that the Governor <br />has instructed the Finance Department to develop plans which would reduce State ex- <br />penditures and prevent the accumulation of a deficit in the state's budget for the <br />1980-81 biennium° <br /> <br />Commissioner Burggraaff indicated that at last calculation the shortfall in anticipated <br />revenue to the State's general fund is $90 million° He expects to refine these esti- <br />mates in mid-August and face decisions about how to meet this situation either then or <br />postpone final judgments until mid-September when additional information concerning <br />state revenues will be available° <br /> <br />But, at whatever time the state faces up to the shortfall--providing the total exceeds <br />$50 million--then, it is likely that the Governor.will cut the amount of funding avail- <br />able for local government aids. <br /> <br />Because cities have already budgeted in anticipation of receiving a specific amount <br />of state aids in 1980, any reduction in aid payments in 1980 will result in a!pro- <br />portionate reduction in money available to cities to spend in 1980o <br /> <br />If the potential reduction in state aids does not occur until 1981, and if the Governor <br />announces his intention to reduce aids in 1981 before the cities must certify their <br />levy for taxes payable in 1981 (on October 10, 1980), then cities may anticipate this <br />reduction in state aid in 1981 during the process of developing the budget for 1981. <br /> <br /> I would encourage each city to tell 'the Governor exactly what effect a reduction in <br /> state aids would have on the city° No exact information is presently available as to <br /> the amount of the potential reduction~ Indeed no decision is expected by the Governor <br /> on any reduction until mid-August. However, you may wish to use the figure of a 5% <br /> <br /> OVER <br />300 hanover building, 480 cedar street, saint paul, minnesota 55101 [812) 222-2861 <br /> <br /> <br />