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Department A royal: Manager Approved: Date: 4/07/2003 Item Igo: VHI. A. Agenda Section: &� Reports &Recommendations Item Description: Report on State -aid Reductions and Recommendation of a Budget Reduction Flan Background With the most recent legislative action, the City stands to lose as much as $717x000 in state -aid for the fiscal year 2003, and each year in the foreseeable future. If the City is fortunate to receive this stale -aid in the future, the amount will likely be sufficient to cover inflationary effects only, and would net necessarily be available to provide funding for new programs. The loss in state --aid includes approximately $85,000 in .local Government Aid, and $632,000 in Market value Credit Aid, and represents 100% of the City's non - purpose state aid. These state aids provide funding for tax- supported programs and services including; police, fire, P ublic works, parks, slating center, general administration and finance, as well as others. To put the maghi tulle of ` the proposed state -aid cuts in perspective; S 717,0 00 is roughly equivalent to: 0 The budget for street maintenance, and snow and ice control combined The budget for parks maintenance ❑ The budget for Administration and Finance Departments combined C1 The monies spent responding to fire calls ❑ 12-14 full -time employees' salaries and benefits As is evident, the loss of $717,000 is substantial, and will have an effect on service levels. Given the timeline under which the Legislature operates, we may not learn the final state -aid cut amount unt11 sometime in mid -May. However, it seems almost a certainty that Roseville l le wi I l lose a substantial amount of state aid for fiscal 2003. The loss in state -aid was expected, but not to the extent of the cuts being proposed. Contingency plans were established d uri n g budget the h process last year that will help cushion the loss of state -aid for fiscal 2 003 . To remedy the loss in state -aid, Staff is reco=ending a dual approach of budget redactions and the use of reserves for fiscal 2003. Additional budget cuts (if needed) and fee increases will be evaluated as part of the 2004 budget process.