Shannon Fiecke of the Shakopee Valley News reports:

“Difficult, but not devastating,” is Gary Shelton’s assessment of the millions in state funding Scott County has been told to live without the next couple years.

Although the interim county administrator was forecasting large reductions because of Minnesota’s budget deficit, the total “unallotment” announced by Gov. Tim Pawlenty last week was still a bigger blow than Shelton expected.

Over the next couple years, the state will cut back $2.8 million in estimated funding to Scott County, both in terms of general aid, as well as grants for specific areas, such as the county’s child-support division. This comes on top of the approximately $946,000 in general aid slashed abruptly late last year.

Division heads are still crunching numbers, but the county anticipates losing slightly more than $1 million in the first of the two-year state budget cycle that begins July 1, and another $1.8 million in the second half.

The governor’s much-anticipated announcement — which could still face a legal challenge — is in addition to hundreds of thousands of dollars in other financial responsibilities the state now expects Scott County to pick up, like the housing of sex offenders, attorneys for parents in child-protection cases and medical transportation services.

While some herald the governor for balancing the state budget without raising state taxes, Shelton disputes the picture of state government living within its means.

“To say they’ve shown fiscal restraint is not really accurate,” he said. “It’s not their spending they’re cutting, it’s our spending. It would be very easy to balance your checkbook if you could dip into other people’s money.”

Scott County prepared for this day — as well as an approximately $800,000 per year decline in interest earnings — by asking employees to take a 2 percent reduction in possible raises (staff still automatically earn 1 percent cost-of-living adjustments). The county expected to save $1 million if everyone agreed. All but a few small unions did, Shelton said. The salary schedule for 92 percent of employees will be lowered.

Budget crunchers have also run a litany of other scenarios for how to save or make the county money — with a goal of another $2 million or $3 million for the next budget.

The county is looking at delaying building projects, as well as bringing in more than $900,000 from these sources: an Xcel Energy in-lieu-of-property-tax payment for the Blue Lake energy plant; a lease to the state for accessing the county’s fiber optic line; the introduction of a property-management Internet portal used by title companies and real estate agents to access county records; and an agreement with Rasmussen College for use of the public safety training facility in Sand Creek Township.

Additionally, the county is leveraging $511,000 in anticipated energy conservation dollars from the federal stimulus package to hire Energy Savings Group to revamp mechanical systems in several buildings to reduce energy costs. The company guarantees energy savings will cover the county’s cost to do the project.

GOODBYE, STATE AID

The local government aid cuts are backloaded with one-third occurring the first year and two-thirds the second. The county plans to eliminate its reliance on the state general aid by gradually phasing the funding out of its operations budget.
The county has already seen its general state-aid dwindle from the $6 million to $7 million range in 2002-03 to $2.3 million in 2010, Shelton said.

A greater concern for Shelton is the state’s reluctance to cut its own spending. Of the total $2.7 billion unallotment, only $33 million is for state departments, a 2.25 percent reduction across agencies that hold many areas — including public safety, corrections and state-operated human service programs —harmless.

“I wish I could just cut by 2.25 percent,” Shelton said. “In some line items, we have cut 25 percent and 50 percent and will probably end up having to cut more.”

If the state must eliminate all local government aid, so be it, says Shelton, but get rid of all the dictates and have true local control, “because this cookie-cutter [approach] doesn’t work.”
Counties say they are increasingly being asked to do more with less as demands on the criminal justice system, welfare services and other areas increase.

Just when the county’s health and human services department thought it might be getting ahead — with grants making two additional positions possible and the recent rescinding of Medicaid rules that would have eliminated $300,000 from Scott County — it learns it will lose $677,000 in funding from the state over the next two years.

The county used the affected human services dollars for a litany of services, as well as specifically on job support for the mentally ill and child-support enforcement. While it’s true, as the governor says, that some reductions are offset with stimulus dollars, Assistant Community Services Director Judith Brumfield said federal funds were intended to save jobs and some counties had built them into their budget.

Anticipated federal cuts for child-support enforcement were supposed to be put on hold with the stimulus package. Brumfield said the loss of funding from the state will leave a hole in the county’s budget that will have to be made up with other funding or a cut to another program.

The largest loss to the division was a general grant that supported a little bit of a whole host of programs, Brumfield said. If the governor had cut a particular grant for a particular program, it might have been possible for the county to eliminate the program.
“No mandates were taken away, only the money,” she said.

ANSWERS

The county feels pushed into a corner, with the state reducing funding, but not relieving the county of its obligations or providing extra leeway in how it does business, all while demands go up.

The county already is the lowest-spending in the state when it comes to human services, Shelton said.

He will not recommend the County Board raise property taxes, which means something somewhere is likely going to have to give. “Maybe we don’t build a road, or we get rid of a service,” Shelton said.
What really scares Shelton, he said, is the state’s strategy for balancing its books — on the backs of schools, cities and counties, and through one-time monies and gimmicks.

Shelton said the state will be in constant state of whitewater with the reliance on one-time money (such as federal stimulus dollars) and accounting shifts (like delaying school payments) to get over this budget hurdle.

“It doesn’t solve anything,” Shelton said. “We would never manage the county the way they’re managing the state — which is, let’s put it off to another day.”

He believes the state is assured to end up with a $4 billion or $5 billion deficit in 2012.

State spending has way outpaced local government, and lawmakers need to “bite the bullet,” Shelton said, instead of pushing off fiscal problems to the next Legislature and governor.

He points to a recent decision in Washington County to quit funding 4-H as an example of a hard choice.

“Tell me when you’ve actually seen the state quit doing something,” he said.

Shannon Fiecke is a staff writer for the Shakopee Valley News. She can be reached at sfiecke@swpub.com.