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Stiehm: Layoffs not likely; next year could be different

What happened: Austin city leaders explored options in the face of cuts in state aid.

What it means: Fewer services and/or higher property taxes. Some municipal workers may get unpaid furloughs or delayed wage increases.

What’s next: Waiting for the final state budget, which will lay out how much Austin will lose.

By Tim Ruzek

truzek@postbulletin.com

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Austin Mayor Tom Stiehm doesn’t expect any city employee layoffs this year, but that might not be the case in 2010, when a more dramatic state-aid cut could hit.

Stiehm and city leaders on Tuesday discussed options for handling big cuts expected for this year and 2010 from the state in local government aid.

Minnesota is facing a nearly $5 billion projected budget deficit for the next two years but some officials are concerned that could rise as high as $7 billion.

Earlier Tuesday, Stiehm and City Administrator Jim Hurm met with leaders of the city’s employee unions to share information.

"I think they’re willing to talk," Stiehm said of the unions.

He noted the city cannot force contract changes on the unions. Most of the unions have contracts through 2010, typically with a 3 percent annual pay raise.

Council member Dick Pacholl said he hopes the unions realize the city’s in a tough situation.

"They’ve got to help, too," Pacholl said, adding maybe employees could wait on getting a wage increase.

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Rather than pay cuts, the city could ask employees to take furloughs or unpaid days off, Stiehm said.

Some cities already are instituting employee furloughs, Finance Director Tom Dankert said.

Dankert also noted about 60 percent of the city’s general fund goes toward employee costs.

Stiehm said there are all kinds of options, including buyouts, and everything should be considered.

Under Gov. Tim Pawlenty’s budget plan, Austin would lose $579,374 in LGA this year and about $1.2 million in 2010. The city already lost $452,110 in LGA for 2008 in December.

If the city’s looking at a potential cut of more than $1 million, council member Jeff Austin said, "everything’s on the table."

At-large council member Janet Anderson said the city needs to find creative ways to cut costs without losing employees. It should be a priority, she said.

Dankert said he doesn’t want to get the council’s hopes up that the city can deal with the state cuts without losing any workers.

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If Austin loses $1.2 million in LGA funding for 2010, the city will be forced to cut jobs, councilor John Martin said.

Hurm and Dankert have said a $1.2 million cut would require "deep cuts from all departments and revenue enhancements" to maintain service levels to citizens.

City leaders are taking action for this year’s expected reduction, such as postponing capital projects and purchases and not filling certain positions when open.

Department heads submitted budget proposals for scenarios involving 10, 20 or 30 percent cuts.

As for the possibility of large property tax increases, a few council members voiced displeasure with the idea but agreed it should remain an option.

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