5.5. SR 08-09-2004 - Laserfiche WebLink

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~lugust 9, 2004 Page 2 of 6 Budget Memo 2005 Revenues In an ideal world, the city would look at expenditures first and identify the level necessary in order to provide adequate services. However, we are not living in an ideal world and revenues to fund expenditures are limited; especially as it relates to additional tax revenues. Last year the city Net Tax Capacity 0NTC) increased by 12%. I__f for next year the growth in the city NTC is about 10% and there is not a substantial increase in the city tax levy for non-general fund activities, then the city should be able to increase taxes for general fund activities by about $500,000 with a very minimal impact on the city tax rate. This general fund tax amount is one which could vary sigmficanfly; depending on the levy for non-general fund activities such as equipment and the pavement management program; depending on the level of expenditures for personal services, supplies, capital outlay, and other services/charges; and depending on where the City Council comfort level is with the city tax rate. The city needs to certify the proposed maximum levy to the county by September 15, 2004, and hopefully the city will know its growth in NTC by this date. This information on the NTC is provided by the county. We need both the NTC and tax amount figures in order to determine whether or not the city tax rate goes up or down. For 2005 there is no state imposed levy limits placed on municipalities. Accordingly, the City Council can establish the tax amount (and rate) at any level that is deemed best in order to provide necessary municipal services. Per legislative intent, Local Government Aid (LGA) is increasing. The city will receive a total of $686,820 in LGA in 2005. This is a $393,696 increase from our 2004 LGA allotment. (The 2005 LGA amount is still about approximately $250,000 below the city LGA amount that was received in 2002.) All in all, this 2005 LGA figure is clearly good news. The city experienced record residential growth in 2003. Staff is projecting 2005 growth related revenues at 75% of the actual amounts received in 2003. Comparing the 2004 adopted budget with the 2005 proposed budget shows an increase of $226,400 or 25.5% in building permits, plumbing/heating permits, and plan check fees. This is a substantial increase and we are always watching the residential market for any trends that may show a slowing down in housing starts. Overall, with the increases in LGA, growth related activities, and taxes, we can guesstimate that the 2005 revenues will be in the neighborhood of $9 million, which would be an increase of approximately $1.1 million or 14%. The above tax amount figure and the following expenditure estimates are my rough ballpark figures and have not been reviewed by the Finance Department. These estimates are for discussion purposes only. Estimates that you can rely on from the Finance Department will be available for the August 23, 2004 worksession. S:\Council~Pat~Budget~2005\080904wrksn.doc