7.0. SR 08-25-2003 - Laserfiche WebLink

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Budget Worksession Memo August 25, 2003 Page 11 of 13 REVENUES The 2004 proposed revenues are $7,619,550. This is $75,850 less than the June amended 2003 budget; and $68,350 less than the originally adopted 2003 budget. The amended June 2003 budget still included the full LGA amount. When considering this $644,138 reduction, then the 2004 revenue are really going up $568,250 or 8%. LGA cuts, tax revenues, growth related revenues, a host fee, and use of reserves are the issues that dominate the 2004 revenues budget. As everyone knows, the city saw a $644,138 reduction in LGA in 2004 as compared to the original 2003 amount. Sixty percent or $386,482 of this amount can be made up by way of a tax increase in spite of levy hrmts being in place. (The levy l/mits in 2004 do not allow for any increases above the 2003 amount due to growth factors as had previous levy limit formulas.) If there is any good news regarding the LGA program, it is that the new LGA formula alloxvs for the city to receive additional funds over the next five years to a projected annual amount of about $800,000 (These five year and $800,000 figures come from a conversation I had with League of Minnesota Cities staff members). Taxes The general fund tax amount has increased due mainly to the recapturing of 60% of the LGA cuts and due to the shifting of the street levy to outside of the levy limits. If the attached levy resolution is adopted and certified to the county by the September 15 deadline, it reflects the maximum amount and the total can be reduced by the Council later once the net tax capacity information is known. The attached preliminary levy sample shows that the city will need approximately a 10°/0 increase in net tax capacity in order to see no change in its tax rate. I have moved the street replacement levy ($150,000) into the general fund and added the 2003 improvement bonds ($100,000) for the street PRP outside of the limited levy. Prior to actually doing an improvement project, the only way to levy tax money for this program was to do so within the levy limit. Now that a project is taking place and assessment has been approved, we have another tax levy option to evaluate. The street pavement rehabilitation program is based on a concept of doing a project every two years of about $1 million with the funding to be 1/3 city reserves, 1/3 tax levy, and 1/3 special assessments. This program needs more review and definition and discussion by the Council. The total amount for each project can increase as can the intervals between projects. An important discussion issue includes whether or not these projects should be bonded and paid for over time. This approach seems appropriate, especially considering the property owner special assessment component of these projects. The city does have monies in reserve for the 2003 PRP improvement project but it may be appropriate to bond for this project and pay for it over time and retain some flexibility by keeping some tax monies in reserves. The city has already levied through 2003 about $466,000 in tax monies for this first project. (As previously noted, the city reserve share comes from part of the landfill surcharge which soon will be labeled as part of the landfill host fee.) The important issue in terms of taxes relates to the street levy being included within the levy limit or being outside the levy limit. Prior to this year we had no choice - the levy had to be within our levy limit. Being outside the levy limit is allowed if we assess out part of the project and bond for the project. When this tax amount