Minnesota Governor Tim Pawlenty unveiled his strategies today for solving a $426 million state deficit, and its not pretty.
The governor said $155 million in state reserve funds would be used, but that still leaves the state operating at $271 million in the red.

$66 million in aids and credits to cities will be slashed.

Each year Minnesota cities receive two payments from the state as part of local government aid.
On Friday, some bad news landed on Duluth's doorstep.
Its local aid will be cut by about $1.7 million.

"We're going to try to avoid layoffs if at all possible However, a $1.7 million deficit is a very serious blow to the City of Duluth," said Don Ness, Duluth mayor.

Counties are also finding themselves on the chopping block.
The governor said $44 million in aids and credits will be cut to counties.
St. Louis county will see a reduction of more than $2 million.

"Unlike the federal government, the State of Minnesota cannot deficit spend, we cannot print monopoly money in the basement--the book has to balance," said Pawlenty.

But balancing the books for the City of Duluth is a different story.

"It is likely that we will have to carry forward a negative balance in our general fund into 2009 and we'll start the year with a deficit," said Ness.

The governor said $40 million will be cut from state agencies.
Even with the significant cutbacks, many municipalities now must find a way to stay afloat.

"And that's extraordinarily frustrating after having overcome a $6.5 million deficit in 2008 and an $8.5 million deficit in 2009."

The University of Minnesota and MNSCU college systems will see state aid cuts of $20 million apiece.

$73 million will also be slashed from the human service sector.

Cities with populations of less than 1,000 are exempt from reductions in local government aid.
The four state counties with populations of less than 5,000 people are also exempt from local aid cuts.