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1998 Budget <br />November 17, 1997 <br />Page 3 <br /> <br />In light of the 1998 tax rate decrease, another issue should be considered by <br />the City Council. This issue, which has only been briefly discussed by the <br />Council during past Capital Improvement Program meetings, is a general <br />city tax for the core village street reconstruction program. Information on <br />the total cost of this program is being developed by the city engineer and the <br />street/park superintendent and will be presented to the City Council in <br />January, but it is clear that in order to adequately fund a program, the city <br />will need a long term tax revenue source similar to the surface water <br />management levy. Initial estimates indicate that a total plan for the core <br />village area streets which need reconstruction could cost in the $6-$8 million <br />range. This project could be accomplished over a ten or twenty year time <br />frame, but if it takes 20 years, then essentially we will have to start over once <br />we get completed with the 20th year. Over a 20 year period, the program <br />would cost somewhere in the range of $350,000 per year and over a ten year <br />period, the cost could reach $700,000 per year. Funding for a core village <br />street reconstruction program will include some general fund tax revenues, <br />use of some city reserves, and some assessments to benefited property <br />owners. Because the 1998 tax rate is going down and the City Council has <br />considered adjusting its budget and tax revenues, the Council could now <br />consider establishing this core village street reconstruction tax revenue with <br />limited impact on the total tax rate. <br /> <br />It is much more difficult to initially establish a tax revenue source of funds <br />for programs than it is to continue this tax revenue. The city could begin the <br />street reserve program with about $125,000 in tax revenue at this time and <br />add to this total in 1999 and thereby have a street reconstruction tax levy of <br />about $250,000 per year established. This can then be continued for the life <br />of the reconstruction program. <br /> <br />Even though the City Council has not discussed a street reconstruction tax <br />revenue program in any detail in the past, it is something the Council should <br />seriously consider at this time as it appears we have an opportunity to begin <br />this program with limited impact on the total tax rate. <br /> <br />\\elkriver\sys\shrdoc\council\bdgt 1117.doc <br /> <br /> <br />