Viewpoint: What the governor's budget cuts will mean for our communities
When learning of the extensive cuts made by the Legislature and then Gov. Tim Pawlenty's unallotment plans, naturally each of us has been asking ourselves what this will mean for our families and our communities.
Today, I focus my comments on potential property tax increases and job losses due to the governor's unallotment decisions. In the months ahead, I will provide greater depth on other areas of the budget, and then shift my remarks to the path forward.
The cuts to city and county aid over the next two years will find Washington County losing $3.3 million (in addition to health and human services cuts), Bayport losing almost $162,000, Lake Elmo losing a little over $69,000, Lakeland losing $20,114, Lakeland Shores losing $3,812, Lake St. Croix Beach losing $59,775, Stillwater losing $1.18 million, and Woodbury losing almost $1.39 million. While it has varied greatly, historically, cities have on average levied back via property taxes two-thirds of a state aid cut.
State wide, property taxes have increased $3 billion dollars in the period from 2002-2010. In fiscal year 2009, property taxes are projected to replace income taxes as the largest source of state and local revenue for the first time in nearly 15 years. Based on the governor's original local and county aid cut proposal, non-partisan state House research estimated that statewide property taxes would increase on average 9.3 percent next year.
The Legislature sought to protect our local governments, and hence property tax payers, from a tax shift of this magnitude. The governor rejected this part of the Legislature's proposals and via unallotment is shifting a significant burden onto local levels of government. Our county and individual cities and townships will struggle to make the tough decisions as to how much to cut versus to increase property taxes to pay for critical services. The Legislature strove to ease this process by passing legislation to reduce state mandates and provide them greater flexibility.
Finally, the cuts incorporated in the appropriation bills and the governor's unallotments will have significant employment impacts in our communities. The cuts signed into law with the budget appropriation bills represented a loss of thousands of jobs to the state, both in the public and private sectors.
With regards to the further employment impacts of the governor's unallotment, state economist, Tom Stinson, testified on June 30th that the estimated additional direct job losses through June, 2011 would be between 3,300 and 4,700. These would be distributed as follows: local government (non-school), 1,630- 1,970; state government, 870-1,530; school districts, 300-600; and the private sector, 500. To put these numbers in the larger context of the options before us at the end of last session, this level of job losses is three to four times the number estimated to have been eliminated with a $1 billion tax increase. Also, these numbers do not include indirect job losses that will occur due to the decreased demand for goods and services by those who have become unemployed.
Our east metro communities are home to many employed in state government and health care. The signed appropriation bills had cut most state agencies 4-6 percent. The unallotments bring this number to 7.5 percent, with an expected higher employment impact. And while the appropriations bill had already cut over $600 million dollars from the health and human services budget, the Governor's subsequent line-item veto of General Assistance Medical Care and unallotments more than doubled this number. Cuts to this area now account for 57 percent of all cuts. More than one out of every 10 employed people in our communities works in health care or social services. These cuts will be felt by our hospitals, long-term care facilities and health provider groups, and then ripple through our communities and insurance premiums.
I present this information not to point fingers, or be alarmist, but rather to foster greater understanding of the consequences of decisions that have been made. We cannot find our way forward to renewed prosperity in the face of these daunting challenges unless we share a common understanding of the problems and the consequences of alternative approaches to addressing them.
Rep. Julie Bunn, DFL, Lake Elmo, represents district 56A, which includes a portion of Woodbury.