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(Draft January 2002) Key Financial Strategies <br /> For Elk River <br /> <br />The frequency of legislative changes and the difficulty in accurately projecting <br />development trends are barriers to long-term planning. Nonetheless, it is <br />important attempt to forecast future demands on property taxes. <br /> <br />The first step in making tax projections is to forecast General Fund <br />expenditures. This spending accounts for the largest demand on property taxes. <br />The chart below contrasts two scenarios. The "Current Trend" scenario extends <br />the actual average increase (8.9% per year) experienced by the City from 1994 to <br />1999. The "Best Guess" scenario applies more current factors to future spending <br />increases: <br /> <br /> Personal services - 6.4% <br />· Supplies - 4.6% <br />· Other services/charges - 4.2% <br />· Contractual services - 2.3% <br /> <br />Projections <br /> <br />16,000,000- <br /> <br />Il - <br /> <br />14,000,000- <br />12,000,000- <br />10,000,000- <br />8,000,000- <br />6,000,000- <br />4,000,000- <br />2,000,000- <br />0 <br /> <br />2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 <br /> <br />J1:3 Current trend j <br /> · Best 9uess I <br /> <br />R'~ure 26- Projeaed General Fund Expend/lures <br /> <br />The second step in forecasting the future requires projections of property <br />valuation. The graph on the next page compares four rates of growth based on <br />changes in estimated market value and the EMV/Tax Capacity ratio applicable <br />in 2001: <br /> <br />· 10-year average <br />· 9% <br />· 7% <br />· Growth with slow down after 2005 (3% inflation with 200 single/20 <br /> multi/10 Commercial/Industrial to 2005 and 100 single/10 multi/5 CI <br /> after) <br /> <br />Page <br /> 40 <br /> <br /> <br />