8.0. SR 08-25-1997 - Laserfiche WebLink

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1998 Budget Worksession August 25, 1997 Page 3 is due to all the additional work and time required based on the 1997 tax class changes that were signed into law this spring. We will be fortunate to know the growth in our net tax capacity before the end of the calendar year. In 1996, the city tax rate was 24.033. This was approximately 22.5 percent of the total. In 1997, the city tax rate was 24.683. This was approximately 21.5 percent of the total. In 1997, the total tax rate included the school building levy. It is estimated that the 1998 city tax rate will be somewhat stable and that our percent of the total may decline. A revenue source that has become a significant issue in the past few years is the COPS FAST funding. Elk River has, or will have, six police officers hired and partially funded under this state and federal program. The revenues for these employees will increase from $101,750 in 1997 to $152,550 in the 1998 budget. The problem that we have as a city is not here in 1998, but will be here in 1999, 2000, and beyond as this $152,550 moves down to zero. These police officer expenses will then have to absorbed within our tax revenue increases. This is true with or without levy limits being in place. This impact could be dramatic upon the city budget. The impact may be felt most in our ability to add additional employees that are necessary for desired new programs. This could impact our ability to hire additional maintenance employees, develop a city engineering department, absorb additional community recreation expenses, add clerical support, etc. We can't really see or touch this problem at this time, but it is very real and will be realized within the next few years. Two revenue decreases of note in 1998 are the $22,000 reduction from the school for the DARE program and the $25,500 reduction for not planning to use any cash flow reserves to balance the budget. The school reduction assumes the cut of one officer from the DARE program and means that the general fund tax revenues will have to absorb this additional police officer expense. If the school cuts both Elk River DARE officers, then further revenue adjustments will be required. The use of cash flow reserves to balance the budget is not generally recommended. It is okay to use this approach occasionally, but the city does not want to annually be dependent on this budgeting technique. These funds can be very difficult to replace if we use them annually to balance the budget. One of the biggest positives in the general fund revenues continues to be the monies generated by our growth. These monies include building permits, plan check fees, plumbing and heating permits, planning and zoning fees, etc. The city also continues to try to be conservative in our estimates for these