HomeMy WebLinkAbout2010/07/19 - ADMIN - Minutes - City Council - Study Session f/f
St. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION
ST. LOUIS PARK, MINNESOTA
JULY 19, 2010
The meeting convened at 6:30 p.m.
Councilmembers present: Mayor Jeff Jacobs, Phil Finkelstein, Anne Mavity, Paul Omodt, Julia
Ross (arrived at 6:36 p.m.), Susan Sanger, and Sue Santa
Councilmembers absent: None.
Staff present: City Manager (Mr. Harmening), Deputy City Manager (Ms Gohman), Controller
(Mr. Swanson), and Recording Secretary (Ms. Hughes).
Guests: Gary Carlson, League of Minnesota Cities
1. Legislative Update-Gary Carlson, League of Minnesota Cities
Mr. Harmening presented the staff report and indicated that Mr. Carlson has been asked to discuss
the State's budget challenges and how those challenges might impact the City as the City prepares its
2011 budget.
Mr Carlson presented the Council with the July economic update issued by the State last week,
along with a cash flow sheet for the State. He stated the reports illustrate the budgetary and cash
flow problems facing the State and the potential exposure of cities to additional budget cuts He also
presented detailed spreadsheets from the State's general fund cash flow analysis which projects a
$994 million budget deficit by the end of June 2011 and monthly cash flow shortfalls during the
next twelve months even though the $994 million deficit was resolved during the last legislative
session. The state will need to acquire a line of credit in the amount of approximately $600 million
to meet the State's cash flow needs. The State still faces a significant $5.8 billion deficit in the 2012-
2013 biennial budget, which will require the State legislature and new governor to make significant
budget adjustments and also to continue to draw on a line of credit to meet monthly cash flow
needs. He noted that the State is required to repay all short-term borrowing by the end of each
biennial budget. He indicated for the 2011 fiscal year, the projected low point in the State's
statutory general fund drops to $277 million in the red as early as December 2010 and in the spring
of 2011, this fund drops to $400 million in the red He stated that the Governor and the
Commission of Management and Budget have authority to restructure or delay payments to schools;
this additional delay in payments amounts to $83 million and must be repaid by May 2011. He
noted that none of these actions identified thus far involve cities directly. He added that the State
will also delay corporate sales and corporate income tax refunds of$221 million, delay payment of
$110 Million for human services programs. He indicated that it is unlikely that the state will delay
the July or October LGA and MVHC payments but he cautioned that the State could yet delay
LGA and MVHC payments due to cities in December, 2010. He reminded the City Council that
the City of St. Louis Park does not currently receive LGA
Special Study Session Minutes -2- July 19, 2010
Mr. Carlson also reviewed the State's general fund budget and stated at the end of the 2012-2013
biennium, the State expects a $5.8 billion budget deficit on June 30, 2013, and this figure does not
include inflation on the expenditure side of the budget. He stated if the State's own inflationary
figures are added in, this figure is closer to a $7 billion budget deficit
Councilmember Sanger asked what will happen if the State does not balance its budget pursuant to
the Constitution.
Mr. Carlson replied that the Constitution says that the State can borrow money to meet its cash flow
needs, but must repay those monies within the biennium; there is no language that expressly
indicates that the State must balance its budget He added the State may be in a situation where it
cannot make payments to State employees, schools, etc. and could be forced to send IOUs.
Mr. Carlson then discussed some of the areas where cities could face additional budget cuts in 2012-
2013, including LGA, which totals just over $1 billion for the two year period. Although the city
does not receive LGA, he stated that there are other state general fund programs that could be
reduced that would impact the City including pension aid to police ($444,000) and fire ($186,000),
the Governor has previously indicated he would not touch those monies. He indicated that the
City's exposure to MVHC reductions is estimated at only $28,000 for 2011 and the City could also
see a reduction in its PERA pension aid of approximately $17,000.
Councilmember Ross expressed concern about the potential impact to the School District budget
since the State is reducing its education budget.
Councilmember Finkelstein expressed concern about the budget deficit adding additional duties to
the City that the State previously provided, e g., the court system.
Mr. Carlson indicated it is unclear at this time but felt that cities would see increased State agency
costs shifted to the local level in the form of higher fees.
The meeting adjourned at 7:14 p.m.
I i
Nancy Stroth, ity Clerk J. cots, Mayor