11-24-2009 Council Work Session Packet

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f TO: Mayor White and Council Members FROM: Ron Olson, Finance Director DATE: November 24, 2009 SUBJECT: 2010 Budget The proposed 2010 budget reflects an effort to address current operating needs during a period of decreasing revenues and limited taxing ability. Tax Lew The total t� levy required to fund the proposed 2010 budget is $4,665,880. This is an increase of $101,194,or 2.22%over the 20101evy. The levy for the General Fund is increasing by$32,280,which is the maximum allowed under the levy limits imposed by the 20081egislature. The City is utilizing the"Special Levy"provision of the levy limit law in order to increase the levy for debt service above the levy limit. The breakout of the use of tax levy revenues by fund is shown on the attached chart titled Tax Levies. Tax Capacitv Rate and Imuact of the Tax Lew on Propertv Owners The County has provided an estimate of the City's tax capacity, based on the annual property revaluation conducted by the County Assessor. It is estimated that the City's tax capacity(or tax base) has decreased by approximately 2.2%. Applying the proposed tax levy to the estimated tax capacity results in a tax rate of 13.778%;this is an increase from the 20091eve1 of 13.183%. Using this tax rate, the City's share of the property tax bill on a home valued at$500,000 will increase by$14.95,or 2.2%. For a home valued at $1,000,000, the City's share of the property tax bill will increase by$29.05, or 2.0%. These calculations assume as 2.2%decrease in the property's value. Homes that retained their value will see increases of 4.5%. A number of properties that are no longer subject to the limited market value are experiencing significant tax increases. General Fund Budget General Fund Expenditures The proposed 2010 General Fund expenditures are $5,928,2100. This is a decrease of$235,640, or 3.82% under the 2009 budget. The major factor to the General Fund budget decrease is the plan to leave vacant positions unfilled. Currently the City has unfilled positions in the Inspections, Public Works, and Police Departments. For 2010 the budget currently includes a 1%wage increase and a$50 per month increase in the City's insurance contribution.