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Paynesville Press - September 18, 2002

Possible loss of aid complicates budget

By Michael Jacobson

To safeguard against a possible drop in state aid, the city of Paynesville passed a proposed tax levy for 2003 that is 12 percent higher than in 2002. But the city will also make plans to cut spending to offset any cuts in their state aid, meaning the higher tax proposal may not take effect.

Last year, the city was one of the lucky ones in the state that received an increase in state funding, which enabled the city to raise its budget while dropping its tax levy.

This year, though, with the state facing a budget shortfall, the city has already been informed that its aid is expected to decline by $9,000 and the League of Minnesota Cities is warning cities about an additional loss in state aid. The League of Minnesota Cities recommended raising proposed tax levies (by five percent of last year's tax levy and last year's state aid). For the city of Paynesville, this means a proposed increase of the tax levy of over $50,000.

City administrator Steve Helget presented the city council last week with a proposed property tax levy of $483,209 for 2003, which the council approved. This proposed levy, which must be certified with the county by Sept. 16, is the maximum amount. It can be lowered by the council at a later date but cannot be raised.

Helget also suggested to the council that during the city's budgeting process this fall the city identify spending areas that could be cut or reduced to accommodate any loss in state aid next year. Doing this would eliminate the need to raise the tax levy to the proposed amount.

In 2002, the city received an extra $93,000 in state aid, which enabled the city to increase the budget by $69,000 while decreasing the tax levy by $42,000. The proposed tax levy, if enacted, would put the city's taxes slightly above their 2001 levels, which was nearly $473,000.

Meanwhile, the proposed city budget increased by only $19,000, or 1.4 percent. The proposed budget includes all spending requests from the city departments, Helget told the council, but these could be prioritized as the city council holds its budget meetings this fall.

Some spending reductions helped the city budget increase only moderately. According to Helget, the city spent $30,000 for a new copier in 2002, an expenditure that is not needed in 2003; and the city is not planning any seal coating in 2003, a savings of $20,000.

The final city budget and the final 2003 tax levy need to be approved by the city council in December.

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