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Pawlentys cuts hit local organizations hard

Fri, Feb 14th, 2003
Posted in Features

Blend a heap of revenue shortfalls and a bunch of budget deficits and simmer at low heat; fold in a pledge for no new taxes, then mix in a divided legislature. Chill and serve to a wary citizenry.

Sounds like a recipe for disaster, and for some local organizations in Fillmore County it is, as recent state cuts will run deep into the services they provide.

There is an axiom in public policy that while you cant do more with less, you can certainly do different with less. And when your product is government services, doing different means changing the who, what, where, when and how of those services.

Over a week ago, Governor Tom Pawlenty balanced the states 2003 budget through an unallotment process where he slashed spending, delayed certain payments and borrowed from state reserves.

Pawlenty ordered cuts to more than $281 million in state spending and also authorized that Sales Tax Reimbursements be delayed, which will save another $50 million. He also used $24 million in state reserves to come up with a total of $356 million in order to balance the budget.

Caught in Pawlentys numbers game were several local organizations:

Semcac, a Community Action Agency (CAA) that delivers services to the poor in a six county area of southeastern Minnesota, will lose $207,000 in Minnesota Economic Opportunity Grants.

Fillmore Family Resources, a non-profit group in Preston, who works with victims of domestic violence will lose $24,000 that funds a child counseling program.

Workforce Development Inc., a work training program based in Preston, will see a youth school-to-work program eliminated.

Pro-Corn Ethanol Plant in Preston will lose approximately 80% of the estimated $3,000,000 they were expected to receive in ethanol subsidies for 2003.

We were taken off guard, Bruce Hartert, Executive Director of Semcac, said. In the governors first proposal there were no cuts.

Governor Pawlenty cut 60% of the $9 million ($5.3 million) allocated in Minnesota Economic Opportunity Grants (MEOG) for 29 CAA agencies working in 87 counties.

According to Hartert, the reduction in MEOG money will have a severe impact on Semcac and the state-wide Community Action Agency network. Unrestricted funds, the state grant money allows Semcac to staff field offices in each of the six counties they serve and run the food shelf as well as community development programs, like housing re-development. Semcac also uses the MEOG money to supplement their base funding for mainstream programs like Head Start. It also provides money the agency needs to develop new programs that require matching funds.

Barb Hermanson, Executive Director of Fillmore Family Resources, lost 22% of her operating budget last week when $24,000 used to fund a counseling program for children who are witnesses to domestic violence was cut.

According to the state, the child counseling is an enhancement program and not a core service to be funded in these down times by the state. Hermanson counters that the program has been in place for seven years and forms the core of her program to break the cycle of domestic violence.

We dont know whats going to happen, Hermanson said. Weve worked with more than 600 children over the past five years who have witnessed domestic violence.

She calls this a high-risk group which, statistics will show, has a higher incidence of delinquency and drug and alcohol abuse. The full-time position that will be lost provides in-home counseling with this vulnerable group.

Randy Long, Career Counselor for Workforce Development, a job training program in Preston, said that as of February 10, funds had been frozen for a program dealing with area youth involved in a student-to-work program.

I just notified the students and the employers of funding cuts, Long said on Tuesday.

Most of the students work for non-profit organizations like nursing homes and schools who are unable to find the extra funds to keep the students employed.

There is one student who lives on his own that relies on this program to meet his living expenses, Long said. Hopefully we can find alternative employment for him.

While Long notes that the school-to-work program will continue to be operated by the schools, the funding component that provided incentives for employers is gone.

While Pro-Corn Ethanol Plant is being run efficiently and is operating at a profit, the ethanol subsidies lost through state cuts will affect the companys bottom line, according to Pro-Corn General Manager Richard Eichstadt.

Many shareholders of Pro-Corn look at the ethanol subsidies as a business agreement between the state and farmers, Eichstadt explained. The state said, If you build an ethanol plant in the rural areas, which are economically depressed, we will pay you 15 per gallon up to 15,000 gallons annually for 10 years. It now appears that agreement has been broken.

Eichstadt said that the plant is profitable and will keep operating, but said that the loss of $20.1 million in funds could affect less profitable ethanol plants in the state more adversely.

If Pawlentys cuts for fiscal year 2003 are any indication of what is to come with a projected $4.2 billion shortfall anticipated for the 2004-2005 biennium, organizations that receive state funding are steeling themselves for hard times.

When asked if he expects more permanent cuts in the next biennial budget, Eichstadt said, This will be a hotly debated subject.

Semcacs Hartert is more pessimistic.

If he (Pawlenty) carries this into the next budget cycle, it will force some community action agencies to close, Hartert said. And it will rip apart the network that has been built up in this state over the past 37 years.

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