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<br />
<br />Budget Worksession
<br />August 22, 2005
<br />
<br />Page 3 of7
<br />
<br />CAPITAL OUTLAY AND CIP
<br />Please see the attached capital ouday page for 2006. The capital ouday amount in the draft
<br />2006 general fund budget is $900,850. I think that we should keep approximately $250,000
<br />of this total in the general fund budget. This is not as much as I would like, but it is a step in
<br />the right direction. Regarding the balance, the city needs to cut some of the requested
<br />expenditures, use equipment reserves for some requests, and use equipment certificates. It is
<br />suggested that the City Council cut approximately $177,000 from streets and equipment
<br />services, use equipment certificates for approximately $300,000 (on a three-year program) for
<br />police and engineering items, and use equipment reserves for the balance of the
<br />expenditures. This use of equipment reserves includes the money the City Council allocated
<br />in April when the 2004 audit was approved. (Using this money allows us to make some
<br />purchases now and remove them from the draft budget.)
<br />
<br />By way of background, please consider the following chart:
<br />
<br /> Capital Outlay History
<br /> General Equipment Equipment
<br /> Fund Certificates Reserves Total
<br />2001 $175,250 $275,000 $104,000 $554,250
<br />2002 $ 88,750 $273,500 $ 56,600 $418,850
<br />2003 $ 37,400 $357,100 $107,500 $502,000
<br />2004 $331,000 $108,800 $439,800
<br />2005 $ 56,600 $345,000 $199,200 $600,800
<br />
<br />Regarding the capital ouday history, a few points should be noted. First, the chart excludes
<br />items funded by other resources. Second, these are the budget figures and not the actual
<br />costs. Next, the city experienced substantial cuts in Local Government Aid (LGA) in 2003
<br />and 2004 and accordingly, almost all of the general fund monies had to go to personnel
<br />services and programs. The LGA reduction was $644,150 each year. Additionally, for many
<br />of the years listed above, the city had end of the year revenues that exceeded expenditures
<br />and therefore we had some flexibility in purchasing equipment. Typically, the Council agreed
<br />with this approach and some requested capital items were financed by way of year-end
<br />budget amendments. Finally, it should be noted that in April 2005, the Council authorized
<br />spending another $102,000 of reserves for a snow blower and a park truck.
<br />
<br />There will be at least four department heads in attendance at this upcoming City Council
<br />worksession to discuss equipment needs. The attached Capital Improvement Program (CIP)
<br />material includes two different forms of the CIP summary and the vehicles/ equipment pages
<br />for fire, police, parks, and streets. As you look at the figures and the requests, you can tell
<br />that we have tried to average out the expenditures. For example, when the Fire Department
<br />has a big purchase we try to keep the expenditures in some of the other departments down.
<br />The planned total of vehicles/ equipment for the "big four" is as follows:
<br />
<br />2006
<br />2007
<br />
<br />$723,000
<br />$845,000
<br />
<br />2008
<br />2009
<br />
<br />$881,000
<br />$768,000
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