09-04-2003 Council Work Session - Laserfiche WebLink

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TO: FROM: DATE: Mayor Peterson and Council Members Ron Moorse, City Administrator September 3,2003 SUBJECT: 2004 Budget —Additional Information To assist the Council in making a determination of the levy amount for the 2004 budget, additional information is being provided regarding both current and future needs and expenditures. This information includes a seven year budget projection and a report regarding long term street rehabilitation expenditures. Although it would be possible to limit the overall 2004 levy increase to less than 2%, this is due to a number of factors that are independent of the significant current and future needs of the City. The 2003 tax levy included $128,000 for the estimated debt service on the Navarre Fire Station bon^. Because the actual debt service schedule for the bonds calls for lower payments in the early years and higher payments in the later years, the $128,000 levy can be reduced to a $70,000 levy for 2004. This is the main factor that enables the minimal increase in the 2004 lcv>'. In addition, the tax levy for operational costs in the General Fund has been minimized to enable compliance with the State-imposed levy limit. However, we know that in the coming years, not only will the levy required for the fire station bonds increase, but the levy for a number of other needs will also need lo be increased. Seven-Year Budget Projection The attached budget projection is provided to give the Council a longer term picture of upcoming need i, and to provide a funding scenario to show the impact on tax lc\ ics and tlic lax capacity rate over the seven year period. The basic assumptions of the budget projection are as follows: 1. Expenditures. All current operating expenditures (with the exception of the additional expenditure items identified in the budget projection) will increase by 3% per year. 2. Revenues. A. All non-tax-levy revenues, with the exception of building-related revenues and police service revenues, will remain constant, B. Building-related revenues and police ser\ icc-rclated revenues will increase by 3% per year. C. A COPS grant in the amount of $75,000 over three years will be used to provide a portion of the funding for the Police Officer proposed to be hired in late 2004. D. One-third of the costs of major street rehabilitation is proposed to be funded through special assessments on the benefited property owners. E. All other revenues to fund the new expenditures included in the budget projection, will come from the tax levy. 3. Tax Capacity.