2002-11-13 CC Packet - Laserfiche WebLink

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, LMC 145 University Avenue West, St. Paul, MN 55103-2044 Phone: (651) 281-1200. (800) 925-1122 TDD (651) 281-1290 LMC Fax: (651) 281-1299 LMCIT Fax: (651) 281-1298 Web Site: http://www.Imnc.org League of Minnesota CitieS Cities promoting e:reeIIence MEMORANDUM To: Mayors, City Managers, Administrators and Clerks From: Jim Miller, Executive Director Re: December aid cuts becoming more likely Date: Tuesday, October 22,2002 In mid-August, the League distributed a memo outlining considerations for your city budget due to the uncertainty surrounding the state's budget. This memo is intended to update the information contained in our previous document. The focus of this memo is not on the much- publicized 2004-2005 biennial deficit that could exceed $3 billion. Rather the focus is on the immediate fiscal year budget and the possibility that by the end of CUrrent fiscal year on June 30, 2003, the state could face a deficit that will require almost immediate remedial action. This could include reductions or delay of December aid payments. Two weeks ago, the State Department of Finance released the quarterly economic update. This quarterly update is not formal state budget forecast. It is a report on year-to-date revenue collections compared to previous forecasts, and makes note of any significant economic or revenue developments that have occurred since the last formal forecast. The news at the update was again pessimistic. The continued slow recovery from the recent recession has translated into a slower rebound in the state's tax collections for the current fiscal year. If current tax collections remain dampened, the state could have a deficit for the balance of the current fiscal year. The next official prediction of the status of the state budget will occur on December 3. The Department of Finance will release its state budget forecast on or around that day and if the short-term projections indicate a 2003 deficit beyond the state's budget reserve, the state will likely have to take quick action.