Gov. Tim Pawlenty’s cuts to Annandale’s state aid aren’t as severe as he feared, Mayor Brennan "Buck" McAlpin says, and the city won’t need to make any more staff reductions. But it will have to watch its spending and look at ways to boost revenue, including the possibility of a tax increase for 2010. Pawlenty’s shift in school payments, meanwhile, will cost the Annandale School District some money, but it’s not expected to be a large amount, according to Supt. Steve Niklaus. The governor last week used his power to reduce state appropriations – called unallotment – to shave nearly $193 million from local government aid to Minnesota cities as well as millions more earmarked for counties and townships. He also made a $1.77 billion accounting shift to defer state payments to school districts. The moves were part of Pawlenty’s plan to erase a $2.7 billion state deficit and balance the budget for the next two fiscal years. He sliced $46,455 from the $353,895 the city of Annandale was originally expecting to receive this year, plus another $107,189 from the $367,463 due in 2010. "Any cuts are always bad, but they’re not as bad as I thought they’d be," McAlpin said. "It allows us not to reduce any staff," he said. "We just have to watch our spending, which we’ve been doing the last six months." Annandale’s $46,000 reduction this year was about $25,000 less than the governor had targeted in a budget proposal earlier this year. McAlpin and city administrator Mark Casey said the city can cover the 2009 reduction because of the cuts it made in January. The city council trimmed 21/2 jobs from the city staff in response to Pawlenty’s unallotment of $51,000 from its 2008 LGA. The city action made up for the loss and resulted in a projected revenue cushion. Both the mayor and city administrator saw the loss of more than $100,000 in 2010 as a more difficult problem. Noting the city can raise its tax levy to recover some of the cuts, McAlpin said, "We’ll be OK for 2010 too. I don’t see the need for any more reductions. "The city is pretty darn low on staff and we really can’t get any tighter than we are now." But it has "to get as lean as we can" and "look under every stone" to save on expenses, he said, suggesting consideration of a wage freeze and other measures. It will also have to look at the possibility of increasing water, sewer and other fees. McAlpin said he didn’t know whether there will be a tax hike in 2010, but anytime the city loses $150,000 in LGA it has to look at taxes, including the possibility of an increase next year. South Haven exempted South Haven and other Minnesota cities with less than 1,000 people and below average property tax bases were exempted from the cuts. Niklaus said state per-pupil payments to school districts will remain the same but will be shifted to a later date. "We’ll get 73 percent of our funds in the current year (the 2009-10 school year) and we’ll get 27 percent of it in the next year." The Annandale district will be able to cover the first-year shortfall with money it has in reserve. "So our loss that year is a loss of interest," he said. But it will have to borrow in the second year, 2010-11. Niklaus said he couldn’t put a number on the total, but it’s not a huge amount of money. If school districts didn’t have some money in reserve they’d be looking at substantial borrowing costs, he said.
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