Other small cities may be impacted by the Local Government Aid (LGA) reductions because of their higher-than-average property tax bases.

Cities with greater than 1,000 populations face cuts to the tune of 3.31 percent of a city's levy plus aid in 2009; and 7.64 percent of levy plus aid for 2010. For impacted cities, the proposed unallotment is limited to $22 per person in 2009 and $55 per capita in 2010.

However, cities with fewer than 1,000 citizens could be exempt from the reductions if they have lower-than-average property tax bases.

The Department of Revenue calculated each cities' average net tax capacity (ANTC) per citizen and compared it with the state's average ANTC per citizen.

Those cities with populations under 1,000 that fall below the state's ANTC per person threshold of $1,157 are exempt, according to Pawlenty's plan.

Pine River and Backus had 2007 populations of 930 and 323, respectively, and lower than the state average net tax capacities per person in 2009 with $589 and $712.

The city of Backus' 2009 budget assumed no change in state aid, but the mayor and council did discuss cuts that could be made if needed if their aid is reduced.

Pine River City Councilors already adjusted the city's 2009 budget.

In April, the City of Pine River cut approximately $76,000 from their 2009 budget anticipating LGA reductions that were included in the governor's January budget proposal.

The cuts included $36,461 in cuts in the maintenance department; $35,000 in cuts for the police department (includes the reduction of a police officer); $2,600 in cuts for janitorial service at city hall and the law enforcement center; $2,200 in cuts to animal control; and $200 of cuts for clerk's training.

The council also passed resolutions at that time to return all city employees to 2008 wages and to allow city councilors to donate a portion of their council salaries to the general fund.

Pine River Mayor Jim Sabas said that the city council set the budget and made reductions in order to recoup funds and also in anticipation of future state aid cuts.

Sabas added that in July the council will start work on the 2010 budget, and hold its main budget meetings in August.

"We'll have to sit down and look at it all completely, to see what we can do if we're going to return to some different level of operations or not. That's up to the council as a whole," Sabas said.

He said that he is not confident that the state will maintain its level of funding in the future.

"We're looking at a tough future, there's no getting around it; so we just have to be vigilant and watching our- keeping them to a place where we can maintain services to the city. We can only go so far; and people have to understand that," he said.

Aside from LGA, cities receive a Market Value Homestead Credit (MVHC) reimbursement.

The MVHC program reduces property tax owed on a homesteaded property - which, in turn, reduces a city's property tax receipts.

The state makes up the difference by reimbursing the city for its portion of the property owner's credit, according to the League of Minnesota Cities.

Pine River anticipates receiving $33,994 in MVHC reimbursement for 2009, but is estimated to receive approximately $6,000 less for 2010.

Backus should receive $11,863 in MVHC reimbursement for 2009, and $60 less in 2010.

Hackensack faces LGA cuts

Hackensack's 2007 population was 311 with an ANTC per capita of $1,475 - $318 higher than the state average.

Hackensack's 2009 LGA is $6,928 and the proposed LGA unallotment for 2009 is $6,842 - leaving only $86 of LGA. The city's estimated 2010 LGA is $6,235, with a proposed LGA unallotment of the same amount for 2010 - leaving zero LGA.

Under the governor's plan, Hackensack also faces a MVHC unallotment of $10,870 for 2010 - all but $1,513 of their total MVHC reimbursement for that year.

Chickamaw Beach, Longville face MVHC cuts

Although they were not slated to receive LGA for 2009 or 2010, under the governor's plan they face MVHC unallotments of $989 in 2009 and $2,282 in 2010. They would have received $3,115 and $3,102, respectively.

Longville's 2007 population was 178 people with $2,836 as their most recent average net tax capacity per person.

They also are not slated to receive LGA for 2009 or 2010, but face MVHC unallotments of $3,916 in 2009 (all but $3,257) and $7,153 (the total amount) in 2010.

The Legislative Advisory Committee is reviewing Pawlenty's proposal including the $200 million in aid cuts to cities and townships; the plan will be finalized by July 1 - the start of the 2010 fiscal year.

Pawlenty's overall proposal includes $2.68 billion in unallotments to cover a projected 2010-2011 biennium budget shortfall.