6.0. SR 11-10-2003 - Laserfiche WebLink

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3 dget S t ,ff Reort Options to close the projected 2004 budget gap include: November 10, 2003 Page 4 of 6 · Use some of the Host Fee revenues · Use some of the general fund unreserved fund balance that is in excess of 40 percent · Use some liquor store reserves · Increase the growth related revenue projections · Reconsider a gas franchise fee · Reduce expenditures by way of not adding additional employees If $80,100 of additional expenses are added to the proposed 2004 budget, then the total proposed expenditures are $7,845,050. Forty percent of this amount (for a Fund Balance) is $3,138,020. At the end of 2002 the city had a Fund Balance of $3,190,589. Additionally, at this time it looks like revenues will exceed expenditures in 2003 by over $100,000. The 2003 growth related revenues are far exceeding the budgeted amount. It seems reasonable to increase our 2004 projections to the 2002 amount that was actually received. The high level of growth related revenues appears to be due to the increase in townhome development and the arrival of some large scale developers/builders in the community. It is likely that the 2003 level will continue into 2004, but whether or not it continues after that is less certain. Even if we set the 2004 growth related revenues at the 2002 amount, it is anticipated that revenues will exceed this level if activity continues at the same pace as what we are currently experiencing. RECOMMENDATION I recommend that the City Council make a few miscellaneous expenditure adjustments and add the Park and Recreation Director position to the budget for 2004. This means that we need to address a $225,500 budget gap. To close this 2004 budget gap, I recommend that the city use a combination of the Fund Balance (minimum of $100,000), increase the growth related revenues to the 2002 actual amounts received (an $88,850 increase), and use liquor store monies as necessary (up to $50,000) to eliminate the 2004 budget gap. I also recommend that when the CIP is reviewed that the City Council consider designating the Host Fee for a major capital project. As noted above, there are monies available in the Fund Balance to help with the 2004 budget and still maintain the 40 percent level. The Council could increase the amount used to balance the 2004 budget and decrease the amount of liquor store monies that are needed. The Liquor Store Fund is being used in 2003 for part of the gun range and may be used in 2004 for part of the ice arena barn floor. Whether or not the city wants to decrease the Liquor Store fund balance any more is a Council discussion item. Use of the cash flow reserves (and to a lesser degree, the liquor store reserves) should be viewed as "one time" type of revenue option. These funds will need to be replaced with tax revenues. CAPITAL IMPROVEMENT PROGRAM In addition to the discussion on the 2003 and 2004 operating budgets that took place on August 25 and September 8, 2003, the City Council also reviewed a few capital improvement S:~Council~Pat\Budget\ 1103balancing.doc