LGA cuts trigger additional cuts to 2011 City budget

Due to the State of Minnesota’s recent budget agreement that cut $23 million in Local Government Aid (LGA) to Minneapolis for 2011, the City must begin to make additional cuts to this year’s budget.

The 2011 budget that was approved by the Mayor and Council last December included the assumption that the State would honor its certified commitment of $87.5 million in LGA to Minneapolis. When the State failed to deliver on that commitment and determined to return only $64 million in LGA, it triggered a waterfall of up to $23 million in additional cuts that were established in December, but were to be triggered only in the event of LGA cuts. The coming cuts come on top of cuts of 80 full-time positions that departments had already made in the 2011 budget.

Because the City’s 2011 maximum property-tax levy was set in September 2010, State cuts to LGA mid-budget cannot be met with tax increases and must be met with cuts to services.

These cuts are reluctantly being made because the State has left the City with no other choice. It means that the City will be cutting much-needed street paving despite this year’s record numbers of potholes; that the City will slow its debt repayment despite the fact that doing so has helped restore Minneapolis’ AAA bond rating and save taxpayers money; and that yet more positions must be cut from Police and Fire despite achieving record-low levels of crime this year.

The $64 million in LGA that Minneapolis will receive in 2011 is the same amount that Minneapolis received in 2010; however, the 2010 amount represented a cut of $26 million from the $90 million in LGA that the State had previously certified that year.

The City’s Finance staff is working with departments that will have the most significant impacts from these cuts. Additional information will be shared as it becomes available.

Aug. 3, 2011

Published Aug 3, 2011