Happy St. Patrick’s Day everybody! It’s going to be a beautiful day for a parade in St. Paul today. 60 F and sunny in March in Minnesota. What could be better?

For those of you new to St. Patrick’s Day, you can click on this link for more information about this special day for those of us lucky enough to have Irish ancestors: St. Patrick’s Day.

For those of you lucky enough to have Irish ancestors, and you’ve got traditional St. Patrick’s Day festivities planned for later, you might want to click this link in today’s Star Tribune: A stat to combat on St. Pat’s Day.

Erin go Bragh!

Here’s an interesting story coming out of the University of Minnesota today:

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Calendar quirk will cost U of M $41M in payroll

by Tim Post, Minnesota Public Radio

St. Paul, Minn. – Because of a once in a decade quirk in the calendar, employees at the University of Minnesota will receive an extra pay check in the next fiscal year, and it could cost the university upward of $41 million.

Employees at the University of Minnesota usually receive 26 paychecks a year. But in fiscal year 2011, which starts this summer, 14,804 of them will get 27 paychecks.

It’s a phenomenon that pops up in the payroll calendar every 11 years for organizations that pay bi-weekly, and the U’s chief financial officer Richard Pfutzenreuter knew it was coming.

“I’m surprised it hasn’t been on people’s radar here,” Pfutzenreuter said. “We’ve talked about it on numerous occasions over the last couple of years, but we’re a complicated place and I think the communication isn’t always as good as it could be. We knew it was coming.”

Here’s the real problem for the U; the 14,000 extra checks will cost the school $41 million in fiscal year 2011.

Pfutzenreuter said the cost comes just as the U faces declining funding from the state.

“It is unfortunate that hit exactly now,” he said. “If I could somehow alter the calendar and push this problem out I would.”

It’s a problem Jim Medlock at the American Payroll Association knows all about. Medlock helps the group’s 30,000 members with payroll education.

He’s heard from plenty of companies over the years dealing the extra paycheck dilemma. His advice, don’t make any big changes to your payroll system.

“If you do make big changes you want to make sure you’ve notified the employees well in advance so that they can start planning for those changes,” Medlock said.

Medlock said one of the potential changes could mean dividing an employee’s yearly salary into 27 checks for one year, instead of the usual 26. But that means workers would get 27 slightly smaller checks, and he said companies that have done that had to give employees plenty of warning.

“Those had to start planning two years in advance to make that change in the salary process, as well as notifying the employees that it was going to happen,” he said.

The University of Minnesota doesn’t have two years to plan for such a change; the new fiscal year is less than four months away.

At this point the U plans to pay employees that 27th check, at least that’s what the university’s general counsel has recommended.

And with an eye to the future, U leaders are already planning how to pay for the extra check in the year 2021, so they’re not caught off guard by a quick in the calendar in another 11 years.

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We also pay our employees every two weeks. This quirk in the payroll calendar will impact us in 2015. We will be ready.

That’s Peter Harkness. He founded a magazine in 1987 called Governing. I got my first job as a city manager in 1988. Mr. Harkness is still doing his thing at Governing. I’m still doing my thing as a city manager, except I’ve moved three times since then. He hasn’t.

Governing is a good source of balanced reporting about government at all levels. I read it, and I know that most of my peers read it too. Mr. Harkness authors a regular column called the Potomac Chronicle. His March column is titled “States, Localities Face a Lost Decade.” It’s a good piece and well worth the couple of minutes it’ll take you to read it.

I suppose I like the column because it affirms my personal view of what I think we’re likely to see in the future for local governments. Sad to say: I’m not optimistic. The economy will recover because it has market forces and political forces working together to push it toward expansion. There is no such combination of forces working together to push local government in any coherent direction. Some want local governments to do more with more. Some want us to do more with less. Others want us to do less with less. Fortunately, I haven’t heard anyone say they want us to do less with more, but who knows, maybe that voice is just late getting to the table.

For city governments in Minnesota, our property tax system offers stability and predictability. Those two attributes are similar, but they are not the same thing. It’s a stable system because property values are, generally, relatively stable when you look at them through a long term lens. They are much more stable than sales or income taxes.

In Minnesota, property taxes are predictable because of the lag built into our system of assessment-taxation-collection. The property taxes that are payable in 2010 are based on the value of property in January 2009 which is based on the sales data of comparable properties in 2008. This is what I mean about predictability. We know that sales data from 2010 will impact values that will be set in January 2011 for taxes payable in 2012.

The buffer offered to city governments by this system is important: it protects a key revenue stream from sudden decreases during times of economic downturn, but it also represses quick revenue recovery when the economy turns around. The buffer in our system means that we can reasonably forecast a major element of our municipal revenue stream a couple of years in advance. It’s good to know the future, even if it’s bad news. Our property tax revenue forecast for the future: flat and getting flatter.

A ‘lost decade’ may very well be in store for cities all across our country as revenues flatten and stay flat, and as elected officials fear the public reaction to even the slightest increase in tax burdens. That’s the future I see anyway.

Sorry.

State Economist Tom Stinson and the Commissioner of MN Management & Budget Tom Hanson held a press conference today to tell us that the State’s budget outlook improved slightly since their last forecast in November. In what’s known as the “February forecast,” the state is projected to have a $994 million deficit for the current budget biennium, and a $5.8 billion shortfall for the upcoming biennium budget in 2012-2013.

This revised forecast is a slight improvement from November’s estimated current biennium deficit of $1.2 billion, but it will still be a challenge for the Legislature to find a way to resolve the $994 million deficit during this legislative session. The differences between the last forecast and today’s are a $184 million reduction in projected expenditures, and a $25 million net-increase in revenues. Most of the spending reductions are from slightly lower state expenditures and higher Federal reimbursements for Medicaid spending.

The forecast also takes a look at the future economic outlook, which in the case of the February forecast is about the same as the November forecast. Over the current biennium, real GDP growth is now expected to average 1.8%, which is up slightly from the 1.4% projected in November. On the employment side, there will be a slight increase in employment levels when the 2010 census work begins, but these jobs are only temporary. In a bit of positive news, the forecast predicts that sometime during the 2012-2013 biennium that wages and employment will reach their pre-recession levels. On the budget deficit side, the FY 2012-2013 budget shortfall is $363 million more than projected in November, totaling $5.789 billion. This figure does not factor in general inflation.

So to sum it up: It could have been worse. If you’re interested in the full documentation of today’s announcement, you find the documents online at: http://www.mmb.state.mn.us/fu-2009-nov.

Got some unfortunate news yesterday from the Minnesota Department of Transportation regarding the future upgrade to the 494-169 interchange:

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Wednesday, February 17, 2010, 11:25am CST | Modified: Wednesday, February 17, 2010, 12:07pm

St. Paul Union Depot lands $35M in stimulus funds

Minneapolis / St. Paul Business Journal – by Alex Ebert Staff writer

St. Paul Union Depot will receive $35 million in federal stimulus funding to complete construction of a transportation hub, the Ramsey County Regional Rail Authority announced Wednesday.

The funds will come from $1.5 billion in Transportation Investment Generating Economic Recovery (TIGER) grants program, part of the federal stimulus bill passed last year. The Ramsey County Regional Rail Authority asked for almost $140 million to fund the $237 million total project cost.

The $35 million is a small chunk of the money Minnesota requested for transportation projects; in total, Minnesota requested about $1.4 billion, according to the US DOT. The Highway 169 and Interstate 494 upgrade project, to eliminate the remaining stop lights, along with 33 other projects, remain on the state’s unfunded TIGER wish list.

Ultimately the St. Paul Union Depot will be a hub linking the Central Corridor light rail line with Metro Transit, Greyhound and Jefferson bus lines and Amtrak’s hub. The construction is set to start after the U.S. Postal Service moves its Union Depot mail-sorting operations to Eagan by the end of 2010.

In December, Ramsey County selected a team led by Golden Valley-based M.A. Mortenson Co. to construct the project.

aebert@bizjournals.com | (612) 288-2112

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What’s next? There are still some possible funding strategies for this project, especially if there is another federal stimulus bill later this spring that is aimed at high priority transportation projects. Until then….