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December 19, 2008 (MINNEAPOLIS) Minneapolis officials today learned that Governor Tim Pawlenty will be cutting aid to local governments by more than $66 million. Minneapolis alone will receive a cut of $13.1 million.

“Minneapolis, like cities and towns throughout Minnesota, is already dealing with the economic downturn. The good news is that Minneapolis is in a much better position to deal with this financial situation because we made major structural reforms in 2003 – the last time the state of Minnesota cut Minneapolis LGA by $35 million,” said Mayor R.T. Rybak.

“But the fact is that main streets across Minnesota are again being hit by State cuts because the State has not addressed its long-term structural financial problems,” said Mayor Rybak. “One thing Minneapolis will not do is take a page from the State’s financial practices and make a short term fix to address a long term structural problem. That’s not how we operate.”

Minneapolis officials today urged the Governor to take a long-term approach to addressing its own financial challenges, as the City of Minneapolis has done. Even before this cut Minneapolis receives $36 million less in LGA than it did five years ago.

“The cut made today by Governor Pawlenty amounts to about one-third of the payment Minneapolis was expecting to receive in less than a week,” said Council President Barbara Johnson. “This represents the equivalent of paying for 130 police officers, or 150 firefighters. Looked at another way, this represents a cut that is about twice as much as it cost the city to respond to the I-35W bridge collapse.”

Even before the LGA cuts in 2003 Minneapolis leaders began taking significant steps to streamline our organization, find efficiencies and address our own financial challenges. Through our disciplined financial management over the course of the last seven years, City officials have put Minneapolis in the best possible position to deal with this economic uncertainty.

Cities rely on local government aid to help pay for basic city services, such as police, fire, streets and parks. The total amount Minneapolis collects in property taxes isn’t enough to pay for the police and fire departments. In 2009, the City’s property tax revenue to the general fund is estimated at $153 million. General fund support to the police and fire departments will total over $180 million.

“As Minnesotans, we all want to be part of the solution. But the answer isn’t simply to shift that deficit onto other levels of government,” said Council Member Betsy Hodges, who chairs the City’s Intergovernmental Relations Committee. “Now is the time for all of us to think creatively and find innovative ways to deliver services. We need to take a shared, regional approach to finding solutions.”

For example, the City of Minneapolis has been aggressively seeking state approval to make major reforms to its pensions, without impacting pension benefits, and to other City government operations. City leaders today urged the State Legislature to give Minneapolis the ability to make these reforms. City officials estimating that the additional costs related to public safety employee closed pension funds alone are projected to increase in excess of $38 million over the next five years due to stock market losses. This number continues to grow as we wait for the markets to recover.