6.0. SR 07-26-1999 - Laserfiche WebLink

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2000 Budget July 21, 1999 Pag-e 2 . As in past years, the City Council will be looking at a "budget gap" between estimated revenues and requested expenditures. Last year the initial budget gap was in the $150-$200,000 range and, while the proposed expenditures have yet to be finalized, it is estimated that a similar budget gap will need to be closed in order to balance the 2000 budget. Most of the council decisions to close the budget gap will relate to personal services (additional employees) and, to a lesser degree, capital outlay items along with consideration on continuing or expanding city programs and services. . Attached for your information is some budget notes in a chart form that may provide some insight into the budget issues we need to address. The top row comes from the annually approved budgets and the bottom row comes from the finance department annual reports. The top row is offered to show the relationships between budget increases, tax revenue increases, and increases in expenses for personal services. (It should be noted that if the equipment and library expenses were included in the general fund budget, the personal services percent of the total budget would be between five and seven percent lower for each year; but the trend of having personal services take up a larger percentage of the overall city expenditures would be the same.) As this chart indicates, a good share of the overall budget increase is financed with additional tax revenues and, in many cases, almost all of the budget increase is related to additional expenses for personal services. The second row of the chart is offered to show the relationship between growth in the city's NTC and this impact on the city's tax rate. When the city experienced significant increases in its NTC (due mainly to business growth along Highway 169), the tax rate remained stable while significant additional tax revenues were generated. In this manner, the city "lived off its growth" for providing additional services and programs. In the late 1990's, legislative action was taken to compress the tax classes and the result was that, in spite of significant growth in the city's overall market value, the city's net tax capacity growth slowed down dramatically and actually decreased in 1999. This had a big impact on our city tax rate when we increased tax revenues, but is should be noted that the tax impact for the homeowners and business owners was relatively modest due to additional state legislative action to increase educational credits. Legislative action has changed the city's tax base mix and has made homeowners responsible for a higher percent of the total taxes paid to governmental units. .