09-11-2023 Council Work Session Packet

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2024 Budget – Page 2 Based on the budget Committee’s guidance, the tax information provided with this memo is based on a levy increase of $1,028,100 (12.3%) and a slight decrease in the rate from 16.53% to 16.52%. Aside from the current operating needs of the General Fund, funding for fire equipment and city facilities are the greatest current need for increases. Current projections indicate that the annual levy for the Facilities fund should be $500,000 and for Fire Capital $560,000. In order to meet these needs, without increasing the overall levy, we are using a combination of transfers and grant money. This allows the city to gradually increase the levy similar to the way the Pavement Management levy was gradually increase. Pressure on the levy will be reduced significantly in 2026 when the expenditures associated with the Long Lake Fire Department are eliminated. As part of the recently passed state budget, we will be receiving a Public Safety Grant in the amount of $371,000. It is proposed to use this grant for the purchase of fire equipment. The combination of the $275,000 levy and $371,000 grant exceed the needed annual amount by $85,000 while phasing in the needed levy over the 2024 and 2025 budget years. Staff is also recommending reducing the 2024 levy for the 2014 Debt Service Fund to $60,000 for 2024. The fund has the required level of cash to pay the next year’s debt service. This is a one-year reduction that purpose is to spread the levy needs for the Fire operating budget over a longer time period. Overall, the 2024 budget process has some challenges, but with phasing in the levy increases needed to properly fund the capital and operating need of the fire department. The City’s strong financial reserves and long-term funding identified for the city’s capital plan has the City in a good position to navigate the current situation without increasing the tax rate. Exhibits: