2.0. SR 08-23-2004 - Laserfiche WebLink

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MEMORANDUM TO: FROM: DATE: Mayor and City Council Pat Klaers, City August 23, 2004 SUBJECT: Budget Worksession INTRODUCTION At the August 9, 2004 City Council worksession a discussion ',vas held on the 2005 budget. At this meeting, a general overview of the budget was presented and Council feedback was received on some personnel and tax issues. A budget gap exists between proposed 2005 revenues and requested 2005 expenditures. This is no surprise but what is surprising to me is the size of the budget gap. All of the financial figures that were discussed in a general nature on August 9 were "in the ballpark" but some of the figures not discussed are coming in higher than I anticipated. What was not discussed in any detail and what has come in higher than I anticipated are the 3% cost of living and insurance adjustment for employees, and the annual cost for the unbudgeted employees that were hired in 2004. The figures that were discussed on August 9 and which are still "in the ballpark" are revenues; the cost for requested 2005 employees; the wage increase (per salary survey discussion); and the estimate for the total increase in the supplies, other services/charges, and capital outlay/transfer budget categories. Details on the 2005 proposal and the size of the budget gap will be revie~ved later in this memo. 2004 BUDGET STATUS As noted on August 9, the city is in a very good situation as it relates to the 2004 budget. Revenues are going to exceed expenditures and there should be adequate funds available at the end of the year to add to the city fund balance so that we can maintain an unreserved balance of not less than 40%. (It should be noted that if the budget goes up $1 million then the city needs to add $400,000 in order to maintain this not less than 40% goal.) This goal of not less than 40% of the next year's budgeted expenditures goal is part of the financial management plan that the City Council adopted on January 28, 2002. Once again, ~ve will be okay at the end of 2004 based on the preliminary projections for the 2005 expenditures budget; but it will be difficult to maintain this pace in the future even if the city remains conservative in its growth related revenue projections and even if the City Council does not spend all of its contingency funds that are available.