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2.1 <br /> <br />2.2 <br /> <br />2.3 <br /> <br />2.4 <br /> <br />3.1 <br /> <br />3.2 <br /> <br />3.3 <br /> <br />3.4 <br /> <br />3.5 <br /> <br />3.6 <br /> <br />(Draft January 2002) Key Financial Strategies <br /> For Elk River <br /> <br />2. Property Taxes <br /> <br />Property taxes are the most important source of revenue for both <br />services and capital investment. In managing property taxes, the City <br />will seek a balance between maintaining overall financial condition, <br />providing an appropriate level of services, maintaining infrastructure, <br />and affordability for residents. <br /> <br />Continued long range financial planning creates the opportunity for <br />managing property taxes and providing the greatest stability in tax <br />rates. Staff will annually prepare-projections of property valuations, <br />levies and tax rates. <br /> <br />State control of the property tax system impairs the ability of the City to <br />undertake meaningful long-term planning. Legislative changes in the <br />class rates, State aid, levy limits and other elements of local government <br />finance cannot be predicted. <br /> <br />The City will seek a balanced tax base through support of a sound mix of <br />residential, commercial, and industrial development. <br /> <br />3. Utilities <br /> <br />The City Council sets fees and user charges for municipal sanitary sewer <br />utility and garbage collection. The Utilities Commission sets fees and <br />charges for the water and electric utilities. The City will encourage the <br />Utilities Commission to adopt financial management policies similar to <br />the policies stated in this section. <br /> <br />The City will strive to set users fees for municipal utilities at a level that <br />creates financially sustaining enterprises. <br /> <br />The fee structure for municipal utilities should produce a net annual <br />surplus of revenues over expenditures after accounting for all operating <br />costs, depreciation of capital assets and payment of debt service. <br /> <br />All municipal utility funds will maintain adequate cash reserves. The <br />reserve needs vary for each municipal utility. The assessment of cash <br />reserves should take into account future capital investments, diversity <br />and stability of revenues and potential for unanticipated changes in <br />revenues and expenditures. <br /> <br />All utility rates should be reviewed every two years to minimize the <br />impacts of rate changes and to insure adequate long-term funding. <br /> <br />Municipal Electric Utility will make an annual contribution to the City. <br />The cash contribution will be based on 3% of gross electric sales within <br />the corporate limits of the City. The City Council will determine the <br />portion of this contribution to be allocated to the Capital Outlay <br />Reserve. <br /> <br />Page <br /> 13 <br /> <br /> <br />