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The financial management planning process in Elk RAver has been called "Key <br />Financial Strategies". Through this process, several issues areas emerged as key <br />factors for the financial future of ELk RAver. <br /> <br />No single factor will influence the future of Elk RAver more than. growth. <br /> <br /> · Growth creates property valuation. <br /> · Growth adds homes, businesses, and institutions that produce the <br /> demand for municipal services and [acihdes. <br /> · The City builds streets, sanitary sewer, water, and electric systems <br /> needed to serve new development. <br /> · Devdopment creates capital charges and user fees used to support debt <br /> and capital investment for utility systems. <br /> <br />A key financial strateg-y for the City will be forecasting future growth and <br />understanding the factors that may cause changes in these projections. <br /> <br />State Law controls many elements of city finance. The results of the 2001 <br />Legislative Session showed how legislative actions affect city finances and impair <br />long-term planning. <br /> <br />The lack of legislative stability increases the importance of planning. Although it <br />is impossible to predict future statutory constraints, planning forces the City to <br />consider how State Law influences decision-making. It also provides an <br />opportunity to create contingency plans as a buffer to adverse legislative change. <br /> <br />· Property Tax Changes. Given the slo~ving of the Stare economy and the <br /> extent of past class rare compression, it is difficult ro imagine further <br /> reductions in tax capacity. In 2001, we were reminded of the speed, <br /> magnitude and unpredictability of changes in the property tax system. <br /> Forecasts of future property values should use conservative assumptions. <br /> <br />Levy Limits. The current law imposes levy bruits for only the next two <br />years. The on again/off again nature of levy Emits shows the risk of <br />planning for a future without some form of limitation on the City's <br />ability to levy property taxes. <br /> <br />New Limitations. The Legislature has periodically considered new <br />lirmtations on the ab&try of cities to levy taxes or incur debt. The most <br />common form of new lirnitanon is a reverse referendum petition. <br />Residents could petition a city to conduct a referendum on certain <br />matters. <br /> <br />Non-Tax Revenues. The impacts of Legislative change are not limited to <br />property taxes. In 2001, the Legislature reduced HACA, but increased <br />Local Government Aid allocations to Elk River. It is impossible to <br />predict the future of State Aid. The City should anticipate discussions <br /> <br />KEYS <br /> <br />Growth and Development <br /> <br />Legislative Action <br /> <br />Page <br /> 6 <br /> <br /> <br />