6.2. SR 01-28-2002 - Laserfiche WebLink

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(Draft January 2002) Key Financial Strategies For Elk River the capital improvements planning process. Cash reserves can be used to eliminate or reduce debt. Reserves can be drawn upon to supplement other revenues to support debt. The use of fund balances must be carefully considered in the planning process. Once spent, these monies cannot be recaptured for other purposes. Debt It is unlikely that the City will meet its capital improvement needs without debt. Debt Limit. State Law limits municipal indebtedness to 2% of the total taxable market value of property in the City. This limit is misleading because many forms of debt are excluded from the debt limit calculation. For Elk River, the debt subject to the debt limit includes general obligation bonds approved by voters, general obligation notes for equipment, and lease purchase financing over $1,000,000. Levy_ Limits. It is likely that some form of levy limits will exist in the future. While the State has no consistent or long-term policy about levy limits, some form of limitation has existed over most of the past twenty years. The treatment of debt under a system of limited levies is important. All previous forms of levy limits have allowed the levy of taxes for debt to be outside of levy limits. Under levy limits, debt carries broader implications. Borrowing may be needed to free up fund balances or revenues for other purposes. Buildings. While the State Legislature gives cities broad powers to borrow money for public improvements, there are limited debt options for buildings. For the purposes of the capital improvement projects discussed in this document, the City may finance buildings with voter-approved general obligation bonds or lease revenue bonds. The nature of the bonds has property tax implications. The tax leW for voter-approved is spread on the basis of market value. The levy for lease revenue bonds is based on tax capacity, similar to all other City levies. Page 43