5.3. SR 07-12-2010 - Laserfiche WebLink

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legislation was passed this year that affects the required PERA contribution for employees and the employer. This additional contribution will not increase the pension benefits. The exact amount of the change varies depending upon the plan, but in round numbers the employees will contribute .25 percent more causing a reduction in their net pay. The employer contribution increases about the same amount and that is included in the proposed budget. Finally, the Council directive on no overtime pay and mandatory compensatory time is continued in the proposed budget. If possible, overtime should be added back to the budget to provide the staff hours needed. ? State Aid: The City is slated to receive a net of $465,742 in state aid in 2011; $686,820 in LGA offset by a permanent reduction of $221,078 in MVHC. As we have learned many times in the past, there is no guarantee that the State will fund LGA or MVHC. Cities and counties are subject to having their aids taken away by the State at the last possible minute. Since the payment of aids is questionable, there are several ways to handle this revenue in the budget. First, the scheduled aid of $465,742 could be included as a revenue source assuming the State’s budget forecast will improve and the State will pay the aid. Second, the aid could be included in the budget with a contingency plan if it is withheld or reduced by the State. Third, it could be set aside to fund capital equipment or other items that are one time expenditures or items that could be delayed if the aid is not received. Taking the first approach is the most risky and could lead to a budget predicament for the City in 2011 if the aid is reduced or not paid. ? Transfers In: Transfers are made each year to the general fund from the waste water, liquor, EDA, and HRA funds. The intent of the transfers is to cover the costs of the services provided by administration, finance, human resource, and other staff paid for by the general fund. The exception is the liquor fund transfer in that is significantly higher as that transfer also helps offset other operating expenditures. It is clear that the transfers in from waste water, the EDA, and the HRA do not cover the actual costs of services provided. Therefore, it is recommended that these transfers be increased for 2011. ? Level of Service: The requested budget is based on services continuing at current levels. Of course, the caveat is that there are approximately 10 unfilled positions that affect the level of service to some degree, but those positions have now been open for more than two years in some cases thus the adjustment in level of service has already occurred. It is increasingly difficult for current staff to maintain the levels of service expected with the staff shortages and the lack of overtime in the budget. ? Estimated General Fund Revenues: There are several revenue sources that are projected to decrease in 2011. Interest income and development related fees represent the largest share of the decrease. Another change proposed is to increase the amount of Municipal State Aid (MSA) that is allocated to maintenance. Since there are no imminent plans for major City street construction, these funds would be better used to maintain and preserve the infrastructure we already have. Finally, the allocation of the transfer from the electric utility may be changed to increase the amount in the general fund and decrease the amount going to the equipment replacement fund since that is fully funded. ? Requested General Fund Expenditures: The requested 2011 expenditures are approximately $330,000 higher than last year and that does not include overtime for \\tsclient\S\Public Bodies\Council\Lori\2010\Budget Memo 7 12 10.doc