Like every other city and county in the state, Mankato is wondering what Christmas will look like this year.

The city hasn’t misbehaved, but a short-term state budget deficit is calling into question local government-aid payments — about $3.6 million in Mankato’s case — cities and counties are expecting by Dec. 26. That’s when the second half of annual state-aid payments is typically due.

Problem is, Mankato, like every city, already has spent the money.

As North Mankato City Administrator Wendell Sande put it, any aid that the city is shorted this month will be “a dead loss.”

The uncertainty — Gov. Tim Pawlenty spokesman Alex Carey said no decisions have yet been made — has led local government to freeze non-emergency hiring and develop contingency plans.

Eagle Lake has held off on hiring a part-time police officer, and Mankato and Blue Earth County have both decided not to fill vacant positions unless they have to. Nicollet County has declared a hiring freeze, effective Jan. 2.

And because the state has $426 million short-term deficit for the current fiscal year, any aid cuts to remedy it would have to come from the Dec. 26 payment. That means the change will affect the 2008 budget.

“It’s a lot easier for us to take action for 2009 activities than it is for 2008,” Mankato Finance Director Dan Scott said.

Cuts to city and county aid aren’t definite yet, but Carey said the governor and city leaders agreed last week that the budget deficit will require “shared sacrifice.”

The lack of certainty has frustrated North Mankato Mayor Gary Zellmer.

“When this is all said and done, do you ever get the feeling that we’ve wasted six months of our time?” he said at a recent council meeting, referring to the half-year process of creating the 2009 budget.

Aid to cities, called Local Government Aid, helps pay for police, fire, streets, parks, engineering, inspection, planning, community development and the city attorney, Scott said.

The League of Minnesota Cities has issued estimates of what state cuts could look like at $25 million and $100 million of the total budget. The league doesn’t know for sure what Pawlenty will do but believes the state is looking at cuts in that range.