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1999 Budget Memo <br />August 31, 1998 <br />Page 2 <br /> <br />REVENUES <br /> <br />Overview <br /> <br />Last year the general fund revenues were budgeted to increase by $369,400. <br />For an accurate comparison to the 1999 budgeted increase in revenues, the <br />adiusted increase in 1998 is $341,000. This is based on the liquor store <br />transfer of $28,400 for the City Hall debt being moved out of both the general <br />fund revenues and expenditures. Of this $341,000 total, the tax increase was <br />$191,000, the COPS FAST increase was $51,000, the local government aid <br />(LGA) increase was $14,000, and the new PERA revenue was $10,000. These <br />four sources amount to $266,000 of additional revenue. An additional <br />$75,000 in revenue related to the city's growth (i.e. plan check fees, building <br />permits, etc.) was generated in 1998. <br /> <br />The initial 1999 projections show taxes increasing by $201,000. However, <br />COPS FAST revenue decreases by $21,000, LGA decreases by $14,000, and <br />there is no change in the PERA revenue. These four sources amount to an <br />increase of $166,000 which is $100,000 less than last year. Additionally the <br />city would like to decrease its dependence on cash flow reserves to balance <br />the budget ($25,700 was used last year), and this compounds our revenue <br />shortage problem. Growth related revenues can increase by a similar <br />amount as to what we saw last year. Overall we are short of revenues and <br />this is in part related to the changes in COPS FAST program and the LGA <br /> <br />program. <br /> <br />Taxes <br /> <br />Last year the city had levy limits imposed for the first time in a number of <br />years. This levy limit law continues for 1999. This law allows the city to <br />increase its non-bonded 1998 tax revenue by an inflationary factor and a <br />household growth rate. There should be sufficient increased tax revenue <br />available within the levy limit to fund necessary expenditures. The real <br />issue is if the NTC will increase sufficiently to keep the city tax rate <br />reasonable. <br /> <br />Taxes are over 50 percent of the general fund revenues. Accordingly, the <br />increase in tax revenue is essential to cover increased expenditures. The city <br />has grown rapidly, but last year we saw one of our smallest increases in NTC <br />due to the compression of the tax classes. The NTC increased about 4 percent <br />last year whereas it increased 11.5 percent in 1997 and 14.9 percent in 1996. <br />This small increase in NTC made generating additional tax revenue without <br /> <br /> <br />