6.2. SR 01-28-2002 - Laserfiche WebLink

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(Draft January 2002) Key Financial Strategies For Elk River INTRODUCTION Financial management is the on-going effort to balance the competing forces of revenues and expenditures. The revenue side of the equation focuses on affordability. The expenditure side addresses community needs and desires. Financial management attempts to make the best use of available revenues to serve the community. Planning examines the current and future ability to meet this objective. Elk River has a long history of excellent financial management. The City's financial condition is sound. The City has managed its finances in an environment of community and legislative change. If current financial practices work, why plan? Comprehensive financial planning brings several benefits: Long term view Many aspects of financial management cover a limited time frame. Annual financial reports look back one year. Operating budgets plan for the upcoming year. Effective financial planning requires a broader view. Many important trends evolve over a number of years. Looking back at a single year often misses the context of changes. Looking into the future creates increases the ability to identify opportunities and obstacles that lie ahead. Build a better understanding Municipal finance is complicated and ever-changing. The planning process provides an opportunity to learn and to ask questions. A better understanding of finance leads to better decisions. Look at whole puzzle, not just pieces Many elements of municipal finance are interconnected. Capital improvements may affect operating costs. Use of reserves for one project may yield an unexpected gap for another. Financial ptanning creates a means for identifying these relationships and considering the ripple effects of financial decisions. Increase continuity Financial management often rehes on informal policies - an understanding between staff and City Council on financial practices. In the short~term, this approach can be very effective. It is difficult to maintain over the long run as staff and Council members change. Written plans and policies provide a common understanding and basis for continuity. During 2001, the City of Elk River has undertaken a financial management planning process. Through a series of interactive workshops, the City Council examined the key financial aspects of municipal government. The workshop topics were (1) Trends and Projections, (2) Operating Projections, (3) Capital Improvements, and (4) Policies. The results of this planning process are summarized in this report. The results fall into four key financial strategies: Page 1