CHICAGO - Local governments in Minnesota are bracing for $110 million in cuts to the state aid payments being sent later this month, following Gov. Tim Pawlenty's announcement that he will reduce spending by $271 million and tap $155 million in reserves to erase $426 million of red ink in the current budget.

Local leaders are worried that the pot of local government aid will face further cuts next year as the state addresses a $4.8 billion deficit in its next budget for the biennium that runs from July 1 through June 30, 2011.

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