Audio Ventura rejects Pawlenty plea to withhold aid to cities and towns (story audio) Photos John Wodele McElroy has other plans to look at More from MPR Big fee increases likely alternative to new taxes (12/20/2002) Budget chief eyes arts for state cuts (12/13/02) (12/13/2002) Respond to this story Talk about this story in the MPR News Forum Submit a commentary Help us cover this story

Ventura rejects Pawlenty plea to withhold aid to cities and towns
December 20, 2002

The governor felt that to withhold the payment or any part of the payment now would be almost an 11th hour pulling-out-the-rug from cities when they have had no notice," spokesman John Wodele said Friday. (MPR Photo/Tom Scheck)

Gov. Ventura has denied Gov.-elect Tim Pawlenty's request to stop the state's aid payment to local governments. Cities and counties are scheduled to receive half of their annual aid payment on Dec. 26. Pawlenty asked Gov. Ventura to delay that payment so he would have more options when it comes to balancing the state's budget. Local government officials say they're relieved, but also know they won't be held harmless in the upcoming session.

St. Paul, Minn. — Ventura spokesman John Wodele says the governor gave Pawlenty's request considerable thought but decided it's too late to deny cities and counties the local aid they were promised by the Legislature.

Wodele says the state's $544 million local aid payment will go through as scheduled. He says lawmakers, including Pawlenty, knew the state was going to have a large deficit to deal with this January. Ventura recommended some cuts to local government aid as a part of last year's budget fix. Pawlenty was House majority leader in the session and helped negotiate the budget-balancing bill that passed over Ventura's veto.

Wodele says Pawlenty and the Legislature now have to pay for their decision. "The important thing here for the governor is the Legislature made a commitment knowing we were going to be in a deficit. And they made a commitment, knowing that, to the municipalities and the county governments. And the governor felt it was his fiduciary responsibility to make good on that commitment," he said.

	McElroy has other plans to look at

Withholding state aid would have given Pawlenty greater flexibility as he manages the state's budget deficit. The state faces a $356 million deficit in the current budget cycle that has to be fixed by June. Budget projections also show a deficit of $4.5 billion through 2005.

Incoming finance commissioner Dan McElroy says he's disappointed with Ventura's decision, but will examine other options. He says they're considering layoffs and other spending cuts to handle both the current and future deficits.

"It requires expanded creativity. But think about it. You mention salaries; state employee salaries -- all of them --are a billion dollars a year out of the general fund. And so non-salary costs have to be a part of the solution and we're looking at those very carefully," according to McElroy.

Local government officials say they're relieved about Ventura's decision. Many said their local-aid payments were already earmarked for certain contracts. They use the money for local needs and state required programs.

Matt Smith, the finance director for the city of St. Paul and former revenue commissioner under Ventura, says the state pays for 43 percent of the city's $176 million general fund. The city is scheduled to receive $37 million in state aid.

"Here in St. Paul, as I imagine every city, we were a little bit on edge wondering if we were going to get the full December aid payment. The year is about over, of course, and there isn't a way to save money in the last four days of the budget year and, of course, no way to raise any money either," Smith said.

Minneapolis Finance Director Pat Born says he's also relieved the city's $56 million aid payment will arrive next week. But he says the state's overall budget problem and Gov.-elect Pawlenty's no-new-taxes pledge has officials worried about the upcoming legislative session.

"We're in agreement with the governor's decision and we know that there are challenges ahead for Minnesota cities as well as the state and we know that there is a lot of work yet to be done," Born said.

Austin Mayor Bonnie Rietz says she knows the Pawlenty administration and lawmakers will have to examine every part of the budget, including local aid, to fix the deficit. She says she's willing to work with lawmakers and Pawlenty and says her city is looking at ways to cut back in anticipation of some cuts to local government aid.

"We know that local government is on the table and we just will look for a solution where all people will be participating in the process," Rietz said.

Commissioner-designee McElroy says Pawlenty's budget team continues to work on its budget balancing plan and expects to announce a plan to fix the current budget deficit around Jan. 10.

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