Duluth officials are scrambling to figure out how they're going to plug a nearly $2 million hole in their current budget, ending Dec. 31, thanks to not receiving an expected $1.7 million from the state.
Earlier this week, the city found out a $3.1 million wire transfer they were anticipating instead totaled only $1.4 million.
That money -- along with another $700,000 in state aid the city did receive -- was supposed to pay a $3.8 million bill the city owes the Public Employment Retirement Association, the pension system for Minnesota firefighters and police.
"There was no warning, because the state only recently has compiled the numbers and did the math," said John Hall, chief administrative officer for Duluth.
The shortfall was only discovered when the wire transfer on Monday was far smaller than the city's finance department expected, said Genie Stark, city finance director.
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In order to make up the difference, the city is looking into borrowing from another city fund, or issuing bonds.
"I'm hoping we can do it internally, because there's costs associated with borrowing," Stark said.
But Councilor Roger Reinert said he'd like to avoid issuing bonds.
Hall also said there will be more budget cuts.
"As of Tuesday, a complete hiring freeze has been implemented, and directors have been instructed to restrict spending to essentials," Hall told the board.
For more on this story, see Friday's Duluth News Tribune.
