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Woodbury to feel some pain from unallotment plan

Gov. Tim Pawlenty's unveiling of his unallotment plan for the state budget last week left many municipalities reeling. But officials at Woodbury City Hall said they have been prepared.

The League of Minnesota Cities on June 17 posted the Minnesota Department of Revenue's city-by-city breakdown of the cuts proposed by the Republican governor as part of his fix for a $2.7 billion state budget deficit.

On its website, the League of Minnesota Cities called the cuts "substantial," but said the backloading of roughly two-thirds of the unallotments until 2010 will allow cities more flexibility to make budget adjustments.

Although many cities will see cuts to local government aid (LGA), Woodbury will not be one of them, as the city has not received LGA since 2003.

But Woodbury did feel some pain, as it will lose $675,000 in market value homestead credit reimbursements from the state in 2009 and almost $700,000 in 2010.

The market value homestead credit is not actually part of the city's budget, but the city must keep the program on its books and then get reimbursed by the state for providing the credit upfront to property taxpayers.

When the state unalloted the program, however, the credit essentially became a tax on cities, said Woodbury city administrator Clint Gridley.

Gridley said the city began to plan for the loss of the market value homestead credit reimbursement earlier this year when it became apparent the state would have to make up for a budget shortfall.

Last year the city saw half of its market value homestead credit reimbursement cut.

Woodbury saw the elimination of the program in 2003, but it returned in 2007 for one full year.

The city has expressed its interest that the state should either eliminate the market value homestead credit or reduce the amount of credit taxpayers receive.

"We understand the state has to reduce its expenses," Gridley said. "But to give a credit to the taxpayers and not fund the city where it comes from is disingenuous."

Mayor Bill Hargis has been outspoken about the need for elimination of the program.

"We are urging our state legislators to simply eliminate the program and either provide property tax relief directly from the state to homeowners or through the "Circuit Breaker" program, which targets tax relief to residents based on their income," Hargis said in a recent city newsletter to resident "The on and, more often, off nature of this program has made it very difficult for cities to plan their fiscal years."

For a look at the city-by-city breakdown of loss in state aid in the governor's unallotment plan go to: