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1999 Budget Memo <br />August 31, 1998 <br />Page 3 <br /> <br />a tax rate increase almost impossible, and is the main reason the 1998 city <br />tax rate went up 6.2 percent. <br /> <br />Last year for the first time, the city allocated $100,000 from its general tax <br />levy towards a capital improvement program (CIP). In retrospect, this was a <br />very wise decision as this money is needed for the Lake Orono project. This <br />CIP tax levy is projected to continue and is again shown at $100,000 for 1999. <br />If possible, this CIP tax levy should increase in order to pay off the city Lake <br />Orono project expenses in 1999. This decision on the Lake Orono tax levy <br />amount needs to be made by the Council in September. As an aside, if this <br />CIP tax levy increases, it will help in the planning for a pavement <br />replacement program. <br /> <br />The 1999 tax revenue projection is based on keeping the tax rate identical to <br />the 1998 level and based on an estimated city NTC increase of 4 percent. <br />Based on these assumptions, the projection shows an additional $201,200 in <br />tax revenue for 1999 and the city needs more than this amount of money to <br />meet its needs. <br /> <br />The taxes generated by the above formula is about $280,000 short of the <br />maximum allowed by law. If the city's NTC increased by 4 percent and the <br />city levied to the maximum allowed by law, then the city tax rate would go up <br />approximately 8.2 percent from 26.255 to 28.416. However, if the city's NTC <br />increases by 6 percent, then the city can levy to the maximum allowed by law <br />with no change in its city tax rate. Information on the city NTC growth is <br />vital in order for the City Council to make an informed decision on the <br />appropriate level of additional tax revenue for 1999. <br /> <br />Intergovernmental Revenues <br /> <br />As noted above, due mainly to the reduction in COPS FAST and LGA <br />revenues, this category is projected to decrease by $25,800. <br /> <br />Char~es for Services <br /> <br />This category is projected to increase by approximately $55,200. The major <br />increases are in administrative projects fees (+ $15,000), plan check fees <br />(+ $10,000), recreation fees (+$10,000) and the school liaison program <br />(+ $10,000). <br /> <br />Fines and Forfeits <br /> <br />This police revenue category is projected to increase by $10,000. <br /> <br /> <br />