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Progress slow at state Legislature on legislation favored by Minnesota counties

Minnesota counties seeking reform this session instead find legislators doing the math necessary to balance the state books.

"It's been very much a three steps forward, two steps backward experience," Jim Mulder, Association of Minnesota Counties executive director, said Thursday in a telephone interview.

Individual legislators have been receptive to AMC's call for redesigning government, he said, as well as from Gov. Tim Pawlenty at times. "Unfortunately, the actual response in legislation has been probably much less than we had hoped for."

AMC, which represents the state's counties including Beltrami County, had launched earlier a redesign plan seeking a new relationship between the state and its counties, which deliver state services. It sought an outcome-based delivery method, rather than focusing on inputs and numbers of clients served.

Especially key to counties is that they have more flexibility in delivering state services, and not be faced with mandated state services without the accompanying state monies to run them.

Counties are making progress on one issue, Mulder said. AMC hoped to eliminate the Short-Term Offender Program, moving to a voluntary, contractual relationship between the state and counties for the housing of short-term offenders. Currently, counties do not have the option of refusing placement of state short-term offenders regardless of whether their jail has space to house them or if the county's budget can absorb them.

"It's in the House bill and the governor has endorsed it," Mulder said. "We feel that we have a chance to have that issue resolved and have counties be allowed to save nearly $7 million in costs that we are currently expending for short-term offenders."

Mulder believes some other minor mandates will be repealed, but AMC has not been able to "excite the Legislature about taking on a broad array of mandates. Hopefully, in the last two weeks, they will be able to look at some of them ... that they will be able to give us the relief that we need to allow us to be more flexible and more innovative in providing services."

Counties expect to lose up to 50 percent in state aid they receive through the County Program Aid program, and so hope that lawmakers give them the tools to still balance county budgets, he said.

Beltrami County could lose as much as $2 million in such aid, County Administrator Tony Murphy told county commissioners recently.

Sen. Rod Skoe, DFL-Clearbrook, however disputes that for the Senate efforts.

"The Senate is not proposing cuts to counties and that we are working on [a] mandate relief bill," Skoe said. "The Senate has no shifts or borrowing in our budget. We have a balanced budget for four years and do not shift the problem onto the future."

Republican Gov. Tim Pawlenty and the DFL-controlled House and Senate all have pieces that AMC likes, said AMC President Jim McDonough, a Ramsey County commissioner. "But we're not aligning in any one particular area where we're getting a consistent House-Senate-governor aligning on any one particular item."

Under County Program Aid changes, "the Senate is actually the best for county government," Mulder said. "They make the least reduction."

Pawlenty has the highest reduction, he said, and while the House's reduction is similar to the governor's, it could be backfilled by allowing counties a local option sales tax of up to a half-cent.

McDonough called mandate relief "a mixed bag" among the proposals. Both the governor and House support the elimination of the Short-Term Offender Program, but not the Senate.

"Sen. Skoe has been a great advocate for a number of our mandate relief, but unfortunately the rest of the Senate has been difficult to really take on any of the really meaty ones, that it's very unclear that we would get a whole lot of relief," McDonough said.

AMC members, meeting this week in St. Paul, have heavily discussed the sales tax option, Mulder said. An AMC legislative affairs panel last week took a position not to support or oppose it.

This week, however, AMC's general policy committee voted to oppose the measure. "We brought it to the full body and AMC has endorsed that recommendation ... to oppose it at this time,"

A good reason to oppose it, said McDonough, is past experience. In 1992, the Legislature extended the authority to counties to levy a half-cent sales tax for purposes of local budgeting. "The state took that tax authority away from us two years later, but then the state kept that half-cent increase for their purposes."

AMC's redesign calls for trust and responsibility between the state and counties, he said. "We still have a long ways to go in having that trust and in moving forward."

On a northern Minnesota issue, AMC is lobbying to keep the payment-in-lieu-of-taxes program intact. Pawlenty has proposed to cut about a quarter of the funding that affects about 14 forested counties in state aid to help counties with large non-taxable state lands.

"We think it is very inappropriate to make cuts in PILT," Mulder said. "We have take a position in opposition to those cuts. That funding is really in place of the property taxes that would be received from those lands."

AMC is recommending that in the case of new lands purchased by the state, that part of the cost of purchasing the land should be an irrevocable trust that sets aside money to make PILT payments in perpetuity, he said.

"We need to set up a system so the Legislature can't raid that money, so it is set up to continue to support the needs of those communities that are the hosts for those state lands," Mulder said.

As the Legislature may not complete its work by the constitutionally set deadline of May 18, Mulder said AMC is encouraging counties to work on their 2010 budgets as well as anticipating more cuts for this year.

"We've been telling individual counties ... to begin making cuts that are appropriate for their county to deal with 2009," he said. The state biennium starts July 1, but counties' 2010 budget won't begin until Jan. 1.

"We expect significant reductions, particularly in County Program Aid," he said. "Next year we are very concerned, both with the loss of County Program Aid but also the other factor that can be used for establishing the levy limit that we are going to have."

That factor is the Consumer Price Index, which now is about 1.5 percent. "That will put tremendous pressure on counties, on the property taxes," Mulder said.

Most counties are already in budgeting processes, he said, "with a worst-case scenario."