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Item 5 . 10 City of Elk River MEMORANDUM TO: Mayor and City Council i FROM: Pat Klaers, City Adrryrwiy DATE: October 28, 2002 Budget Memo On September 9, 2002, the City Council approved the proposed maximum tax levy resolution. At this time there was a $79,100 gap between projected revenues and expenditures. Revenues were proposed at$7,653,950 and expenditures were projected at$7,733,050. Based on expenditures, the 2003 budget was projected to increase 7.17%. Prior to this September 9, 2002 meeting, the City Council had a worksession where the budget gap between revenues and expenditures was adjusted from $362,100 down to $79,100. Attached is an August 26, 2002 memo (with some hand written notes), which identifies the adjustments that were made in order to bring the 2003 budget gap down to $79,100. Since the September 9, 2002, City Council meeting, a number of issues have surfaced which impact the proposed 2003 budget. These issues are identified as follows: $79,100...9/9/02 budget gap $21,500...school liaison revenue $4,000...decrease in revenue for Police services $3,000...lower expenditure for VisionAlR service contract—Police $3,000...juvenile grant revenue reduction (received in 2002 and not in 2003) $15,000...higher recreation program expenses for leasing gymnasium space A.�,� $10,000...higher building maintenance expenditures being projected Ajo $86,600...new budget gap p -t /S ono Lgoc-r- As you can tell there has not been any progress since September 9 in closing the budget gap in spite of receiving school liaison revenues. Additionally, staff had concerns that the 2003 problem was going to get even worse as we began to analyze year-end 2002 revenue projections. In this regard, consider the following: