FAIRMONT - Local officials have been bracing themselves for inevitable state funding cuts given Minnesota's $2.7 billion deficit.

The state is mandated to balance its budget, and with lawmakers unable to do so in a timely manner, Gov. Pawlenty took matters into his own hands this week. His proposal will be adopted today, enforced through executive power.

The governor's solution covers a two-year period. Included in the cuts are $300 million in state aid for cities, townships and counties. Human services will lose $236 million. Schools may be forced to borrow money because of delayed payments of $1.77 billion.

Normally, during the school year, districts receive 90 percent of their state aid, with 10 percent coming afterward. Through 2010, the breakdown will shift to 73 percent during the school year and 27 percent afterward. Though it isn't a direct loss, the delayed payments will negatively impact schools in the long run, though how much will depend on interest rates.

"It will increase our expenses if we have to go out and borrow," said Fairmont Area Schools Superintendent Butch Hanson. "... Having a shift is preferable to having a reduction in revenue, but it still has an impact."

Health and welfare programs in the community and around the state will take a hit as well.

"We certainly are concerned about our abilities to carry on the programs we must do," said Warren Knudson, executive director of Faribault and Martin County Human Services.

Prior to the governor's announcement, the agency had taken some measures to reduce spending and save money, including wage freezes through next year.

"We've already been proactive in preparing for 2010," Knudson said.

But finding ways to do without can be difficult since most of the services are mandated.

"We could cut staff but then we don't get some of the work done that needs to be done. It just doesn't work," he said. "There are only so many hours in a day."

Meanwhile, with the current economic crisis, the demand for services is increasing.

"To do more with less, how do you do that?" Knudson asked. "To do more with the same, that's a little more manageable."

Some of the cuts will affect county grants for the child support program, and fewer people will be eligible for health assistance. Whether federal funding will help offset the state's unallotments and whether counties will trim from human services' budget because of their own losses in state aid remains to be seen.

"Our budget is finalized at the end of August, so that's the date when we'll be shooting to have all the answers," Knudson said.

City staffs also are searching for ways to cope with the funding cuts, with a similar timeframe to find solutions.

Recommendations will be brought to the Fairmont City Council in July, leaving a month before the city's 2010 budget must be finalized.

For Fairmont, the governor's announcement means the city will be shorted $1.28 million in local government aid through 2010.

The "unallotments" already began in December 2008, when cities were informed they would not be getting money they had expected to balance their year-end budgets. Fairmont lost out on $270,000 - money that had already been spent since the city was under the assumption the funds would be coming as usual at the end of the year.

Going forward, officials are better prepared.

"It's not quite as deep as he (Pawlenty) had proposed in January, but obviously a million bucks is still a lot of money," said Fairmont City Administrator Jim Zarling.

In response to the cuts, capital replacements are frozen except on an emergency basis through 2009, and the freeze will probably last through 2010 as well.

The city already cut into its streets and parks staff, and a canine unit was not replaced because of the cost of purchasing and training a new dog. The police department still has one canine unit on staff.

The governor has stated the funding cuts should not be so deep as to affect public safety - a statement that made Zarling laugh.

"When public safety is the most significant part of most city's budgets, how he or anyone else can think it won't affect public safety is beyond me," Zarling said.

In Fairmont, public safety accounts for 41 percent of the general fund budget.

"To say all cuts can come from the other 60 percent of the budget probably doesn't make sense," he said.

However, the City Council has agreed public safety is a top priority. So while the police department won't be completely off limits for cuts, it won't be on the top of the list either.

"The council has indicated its first goal is to try to maintain service levels as best we can and we certainly will do that," Zarling said. "... With general meeting discussions and citizen input, the message we've received is that people really like what we're doing and they want us to continue to offer the same services.

"We'll see how much that costs and if the sentiment is still the same or not."