08-06-2003 Council Work Session - Laserfiche WebLink

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TO: Mayor and City Council FROM: Ron Moorsc, City Administrator ^ DATE: August 1,2003 A SUBJECT: Preliminary 2004 Budget Overview The 2004 budget reflects an effort to comply with the state-imposed levy limit, and to deal with limited revenues, while maintaining current service levels and accommodating the additional costs related to the start-up of the Navarre Fire Station. The 2004 budget is a difllcult one on both the revenue and expenditure sides. A number of revenue sources have been reduced by a total of approximately $140,000. This includes $63,693 of State Aid, of which only 60% can be recouped through the property tax levy. The levy limit will not allow the levy to be increased to offset the remaining $102,000 of revenue reductions. On the expenditure side, several areas of expenditure arc increasing in 2004, the most significant of which are related to fire service, particularly the costs for getting the Navarre fire station staffed and operational. Although these start-up costs are only for a three-year period, they are diflicult to accommodate in the current budget environment. In an effort to balance the budget, expenditures are proposed to be substantially reduced in a number of areas, a number of fees and other revenues are proposed to be increased, and some budget reserves are proposed to be used to fund several specific expenditures. The focus of this effort is to reduce expenditures in a way that enables the City to continue to provide day-to-day services at current levels. With the exception of fire ser\ ice, this budget does not allow for increased ser\ ice levels. There are a number of needs that will remain unmet. A number of fees will be increased to better reflect the actual cost of me service provided. General Fund Budget Expenditures The preliminary budget overview focuses on General Fuml expenditures because they have the greatest impact on the tax levy. The proposed 2004 General Fund budget expenditures are $4,669,392. This is a reduction of $43,488, or .92% from the 2003 budget. A summary of the major General Fund expenditure increases is as follows: Annual pay adjustments. (The proposed budget reflects a 1% increase in pay schedules, plus step adjustments. The cost of the I % pay adjustment is $21,000. The cost of the step adjustments is $16,953. The Minneapolis/St.Paul Consumer Price Index, for the last half of 2002, was increasing at an annualized rate of 1.3" •. $37,953