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1998 Budget Worksession <br />August 25, 1997 <br />Page 2 <br /> <br />from taxes and, for the first time in years, the amount of additional tax <br />revenues the city can collect is being restricted. <br /> <br />REVENUES <br /> <br />A new state law imposes levy limits upon municipalities. This law has an <br />impact on the 1998 general fund budget. For the first time in a number of <br />years the city cannot determine the level of service necessary to meet our <br />needs and then adjust taxes accordingly to finance this level of service. <br />However, if the city makes some minor adjustments in the non general fund <br />budgets and takes advantage of the special levy for part of the expense for <br />the COPS FAST employees, then the total impact on the general fund tax <br />revenues is not overly significant as compared to previous years. <br /> <br />The levy limits law allows the city to increase the non bonded 1997 tax <br />revenue amount by an inflationary factor and by a local household growth <br />rate. The levy limit law impacts the tax revenues in the general fund, <br />library, development fund, dam loan, and part of the surface water <br />management (SWM) program that is not for debt. The "minor" adjustment <br />noted above which will help the general fund situation is to have all the <br />available increase in revenue for inflation and household growth go toward <br />general fund activities. If the Council accepts this adjustment, then the <br />library, SWM program, development fund, and dam loan budgets and tax <br />levies will be identical in 1997 and 1998. This approach shifts approximately <br />$15,000 of tax revenue to the general fund to finance municipal services. <br /> <br />With this shift of tax revenue increases to the general fund, and by adding <br />the $58,432 in COPS FAST special levy into the general fund, the total <br />general fund tax revenue increase will be approximately $317,450. This is <br />similar to the 1997 increase of $312,650 and to the 1996 increase of $326,950. <br />The general fund tax revenue increase has always been the majority of the <br />total budget increase and this will be true again in 1998. <br /> <br />Tax revenues in the budget have an impact on the city tax rate. We have <br />usually tried to keep the tax rate stable and live off our growth in the tax <br />base. To make an informed decision regarding this goal, the city needs the <br />county figures for increase in our net tax capacity. However, with levy limits <br />in place, this county information on our growth isn't really necessary unless <br />the city does not levy to the maximum allowed by law. Not needing this <br />growth information from the county in 1997 is good because it will not be <br />available. The reason this information will not be available from the county <br /> <br /> <br />