State Budget Forecast Predicts Billion Dollar Deficit

Posted at: 12/05/2012 5:45 PM
Updated at: 12/05/2012 6:00 PM
By: Katie Eldred

(ABC 6 News) -- State finance officials released and updated budget forecast today predicting a 1.1 billion dollar deficit.

Local officials said they are hoping the budget shortfall won't lead to any more LGA cuts.

Like many communities, City administrator Stevan Kvenvold says Rochester has had to make tough decisions with cuts in local government aid.

"Government aid, the uncertainty and the reduction in the past ten years has been problematic for us," said Kvenvold.

Because of the cuts the city has been forced to raise property taxes.

"I don't think it's a fair tax because the value of one’s property does not dictate what demands you have for city services, but it's about the only revenue we can rely upon," said Kvenvold.

That is why anytime you hear news of a state deficit it is concerning for local governments.

"Local government aid is about half our cities budget," said Jim Hurm.

Austin City Administrator, Hurm says the cuts have grown so routine that they try not to depend on LGA funds.

"We're constantly looking for efficiencies and ways of keeping our budget down, so if we get hit as we have in the past that it isn't going to be devastating," said Hurm.

The new Minnesota budget forecast states there will be a 1.1 billion dollar deficit for the next two years. It also says despite that deficit the state will be able to pay back 1.3 billion dollars to our schools.

As of now Kvenvold says he is not too concerned about cuts to LGA.

"Indications we've gotten say LGA would not be targeted," said Kvenvold.

Senator Dave Senjum told us in a statement that despite the deficit he feels the forecast had some very positive news for the state especially that we will be able to pay back our schools.

"We are hopeful that we will maintain and we won't have to go through another budget reduction," said Kvenvold.

State officials also said the state forecast could become obsolete if congress doesn't reach an agreement and sends us over the fiscal cliff.