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PviiCZiVED <br />•‘=TING <br />L9tigu9 cf Gf»t# <br />CfIfM promo Hmg mtumitnct <br />2 6 m <br />UHcwvo <br />/'.iJJ 2 I crro <br />145 University Avenue 55103*2044 <br />Phone: «»1) 281-l^X^) 925*1122 <br />TDD (651) 281*1290 <br />LMC Fax: (651) 281*1299 LMCIT Fax: (651) 281*1298 <br />Web Site: http://www.lninc.org <br />To: <br />From: <br />Re: <br />Date: <br />MEMORANDUM <br />Mayor*, City Managers, Administrators, and Clerics <br />Jim Miller, Executive Director <br />2003 City Budgets <br />Friday, August 16, 2002 <br />Volatility in the state's budget over the past year is now translating into uncertainty for local <br />budgets. Although the magnitude of the state budget deficit will not be officially revised until <br />late November or early December, the Commissioner of Finance has recently suggested that the <br />deficit could be as high as $2.7 billion for the 2(X)4-2005 biennium. With the additional <br />pessimistic economic news that has been released over the past several weeks, this fall’s budget <br />forecast could even exceed the Commissioner’s gloomy figures. <br />In recent weeks, the League has received numerous inquiries from member cities seeking advice <br />on how to prepare for the uncertain state budget situation and the potential for state aid <br />reductions. The situation for larger cities is further complicated by levy limits, which will be <br />significantly more stringent due to a remarkably low inflation adjustment (0.76%) for 2003 <br />levies. For many cities, levy limits will trim the list of policy alternatives available to address <br />possible 2003 state aid cuts. <br />To make matters more difficult, your city is undoubtedly facing other budget pressures such as <br />rising employee health insurance costs, potential volunteer relief association contribution <br />increases, lower investment earnings, and possible additional security costs in light of the <br />September terrorist attacks. <br />The purpose of this memo is to provide you with insights into this uncertainty based upon <br />conversations we have had with key state decision-makers and information available to us at this <br />time. The state budget situation is fluid and will undoubtedly change before the Legislature <br />convenes in January. Although the League will be working with legislators to reduce the size of <br />any proposed state aid or credit reimbursement reductions, it is important for your city to begin <br />preparing now for the possible effects of a cut in state aids.