Minnesota's tax collections are down a further $233,000,000 through October 2009 and coincidentally the State is now going to local governments and auditing them to make sure we are collecting enough in fees and taxes - the State gets a healthy cut of these.
The State is looking at a $4.431 Billion to $7.25 Billion deficit for 2012-2013. This is on top of the massive deficits we are dealing with today.
We are facing a possible further unallotment - this means the State will cut even further the money they owe the City. The previous unallotment that hit cities was roughly $375 million - if the high end of $7.25 billion state deficit comes to fruition then $733 million would be expected to be cut. This could mean hundreds of thousands of dollars in further cuts to Isanti.
The two largest declines is the anticipated drop in property valuations and the collapse in the State's Local Government Aid. In the year 2011 we will be facing over $500,000 in reduced property tax and LGA revenue alone which equals nearly 20% of our total budget. Again so long as we follow the plan I have laid out we will be able to weather this storm but we will need to continue to make the hard decisions.
The good news is we are on top of this and I have prepared a number of scenarios that will carry us through this difficult time. The latest financial tool I developed for the City helps predict the revenue we have in the next few years and always us to plan accordingly. According to this tool total revenues for the City will not completely recover until 2015. This is based on lowering tax valuations,LGA decreases, Liquor store revenue, building permits and general fund balance transfers. I have also based this on NO TAX increases during this time period. We can not tax our way out of this.
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