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Perham, New York Mills could be hit by proposed local aid cuts

Several cities in East Otter Tail County stand to lose thousands of dollars in Local Government Aid (LGA) in the proposed budget recently released by Minnesota lawmakers.

According to numbers released by the League of Minnesota Cities, Perham stands to lose $113,642.

New York Mills would also lose $51,612 in LGA funding.

"Obviously, cities in rural Minnesota who rely on LGA to provide essential services at an equitable tax rate are disappointed at this proposal," Perham City Manager Kelcey Klemm wrote in a letter to the Perham City Council.

"The proposal is even more stinging as rural Minnesota has a strong presence in both the House and Senate majority parties," he added.

Klemm wrote that in anticipation of LGA cuts, the city council had compiled a list of potential budget cuts, which include reducing capital expenditures by $157,000.

This includes cutting $10,000 from the police budget, $10,000 in Christmas decorations and...

"In short, despite promises of new leadership, reform and new ideas, the cities get more of the same," Klemm wrote.

NY Mills Mayor Larry Hodgson addressed the proposed cut in funding at Wednesday night's annual Civic and Commerce Association meeting in his State of the City address.

"Cuts in LGA leave us with the daunting task of operating with less," he said. "It isn't going to be a pretty picture, and some people are going to be hurt by what's going to have to be done."

Hodgson pointed possible tax increases, cuts in recreational opportunities and city staff layoffs as possible city solutions to dealing with the loss of aid.

$200 million from budget

Republicans who control the Legislature announced they want the Mark Dayton administration to trim $200 million from the budget that ends June 30 and cut another $840 million from proposed spending in the two-year budget that begins the next day.

Tuesday's Republican bill introduction was the first of several budget-balancing measures, with larger budget cuts coming later.

Chairwoman Mary Liz Holberg of the House Ways and Means Committee said the Legislature will reform Local Government Aid so cities that really need the aid still receive it.

The legislative proposal would reduce payments to cities by $460 million over the two-year budget that starts in July.

The president of the Coalition of Greater Minnesota Cities was not happy with the news.

"We are deeply concerned that politicians who are calling for 'reforming LGA' have started the legislative session without any substantive policy conversation, but rather a blanket proposal that is simply another cut," Park Rapids Mayor Nancy Carroll said.

The bill could pass the Legislature next week.

Other area cities

According to the report, Battle Lake could lose $37,131 of its LGA, Frazee $50,108 and Wadena $144,751

Ottertail, Vergas, Richville, Henning, Dent and Bluffton would not lose any LGA funding if the budget is passed.

(Forum Communications writer Don Davis contributed to this story)