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<br />April II, 2005 <br /> <br />Page 20(5 <br />Capital Improvement Program Worksession <br /> <br />It should be noted that the timing and cost for some projects are very difficult to predict. An <br />example is when expenses will be required to repair or upgrade Ditch 28 and how large of a <br />project will be required. AdditiQnally, revenues for some projects are simply not available. <br />An example of this point is the Ice Arena which has needs for a Zamboni and building <br />improvements; whereby the Ice Arena annually loses money. In this regard, other funding <br />sources, either reserves or taxes, need to be made available if the Ice Arena improvements <br />are to be made or the equipment is to be purchased. These two factors (and many other <br />issues) make the ten year CIP a very difficult document to put together. In many respects, <br />after the first few years the CIP is an educated guess and this is why the CIP needs to be <br />updated frequendy. <br /> <br />I think the City Council should concentrate on CIP expenditures related to <br />equipment/vehicles, buildings, and streets. I am most concerned about expenditure that <br />direcdy or indirecdy come from tax revenues and reserves. I am less concerned about <br />expenditures that come from Enterprise Funds (i.e. Sewer Fund) or from Park Dedication <br />although these expenditures still need to be closely reviewed to make sure the city is not <br />getting over-extended. <br /> <br />The following comments, broken out by type of expenditures, are offered to help in your <br />discussion at the April 11 meeting. <br /> <br />Equipment/Vehicles <br />Equipment and vehicles for the next ten years are going to be needed in almost all city <br />departments. As the city grows, so does our need for additional equipment/vehicles. The <br />most expensive equipment and vehicles are street trucks, fire trucks, park equipment, and <br />police vehicles. The main funding source for equipment/vehicles has been the General Fund <br />(taxes), Equipment Certificates (tax levy for 3-5 years-with interest payments), and <br />Equipment Reserves. <br /> <br />One of the goals I have is to equalize on an annual basis the total expenditures for <br />equipment and vehicles. In 2005 the Equipment Reserve expenditures are $199,200, the <br />Equipment Certificate expenditures are $780,000, and the General Fund expenditures for <br />equipment are $131,600. This is over $1.1 million for equipment. This is the high point over <br />the next five years. <br /> <br />In the future, as much as possible should be moved into the General Fund in order to <br />decrease our dependence on Equipment Certificates. However, over the past five years our <br />Equipment Certificate budget has averaged $316,000; and this CIP shows Equipment <br />Certificates over the next five years averaging $746,000. This increase is in conflict with our <br />financial management goal of reducing our dependence on Equipment Certificates. Either <br />some items need to be moved to the General Fund; or some requests for equipment and <br />vehicles need to be eliminated; or the Equipment Certificate goal will not be achieved. <br /> <br />Given normal increases in the tax base and the desire to keep the tax rate level, part of the <br />financial equation that the City Council will have to sort out is how much equipment should <br />be funded from each funding source. This is not an easy equation. Dealing with our growing <br /> <br />s: \ Council\pat\2005\ Worksessions \ CIP.doc <br />