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Previous levy limits included some growth factors. This allowed our maximum amount of taxes to <br />be levied to increase. During these years the city increased tax revenues in the general fund by about <br />$400,000 per year. Also, as the net tax capacity increased, this additional tax levy did not result in a <br />substantial change in the city tax rate. <br /> <br />If the city does increase its levy by the 60% of state aid cuts, then we will have about $386,000 <br />available to offset our LGA cuts. This would be similar to the amounts that have been added to the <br />general fund in previous years when the levy limits included a growth factor. Even with this increase, <br />the 2004 city budget would start with revenues at a lower level than what was adopted in 2003. <br /> <br />Some of the attached 2003 budget adjustment are "repeatable" in 2004 but some are not as they are <br />one-time reductions. Also, we know that there will be some additional expenditures for programs in <br />2004 which are not in the 2003 budget, including such things as: an increase in the payment to the <br />county for assessing services, a payment to the Boys & Girls Club for renting of the gymnasium, and <br />the initiation of a complaint tracking software program. Additionally, the city is looking at the <br />general fund impact for various increases in employee insurance, wages, and pay plan steps. At this <br />time, it is also unknoxvn whether or not any use of reserves in 2004 will be proposed but this may be <br />reasonable when all things are considered. <br /> <br />The cuts to the city in state aids are deep but they are better in 2004 than what was originally in the <br />Governor's proposal. Over two years, the city will lose approximately $1,288,000 but this is much <br />better than the Governor's proposal of approximately $1.9 million over two years. Additionally, the <br />availability to make up some of the cuts in 2004 with an increase in property tax will help. <br /> <br />Recommendation <br />It is recommended that the City Council approve the budget amendments as attached. <br /> <br />S:\COUNCIL\Pat\Budget\060903budgetupdate.doc <br /> <br /> <br />