6.2. SR 01-28-2002 - Laserfiche WebLink

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(Draft January 2002) Key Financial Strategies For Elk River KEYS The financial management planning process in ELk River has been called "Key Financial Strategies". Through this process, several issues areas emerged as key factors for the financial future of ELk River. Growth and Development No single factor will influence the future of ELk River more than growth. · Growth creates property valuation. Growth adds homes, businesses and institutions that produce the demand for municipal services and facilities. · The City builds streets, sanitary sewer, water and electric systems needed to serve new development. · Development creates capital charges and user fees used to support debt and capital investment for utility systems. A key financial strategy for the City will be forecasting future growth and understanding the factors that may cause changes in these projections. State Law controls many elements of city finance. The results of the 200i Legislative Session showed how legislative actions affect city finances and impair long-term planning. The lack of legislative stability increases the importance of planning. Although it is impossible to predict future statutory constraints, planning forces the City to consider how State Law influences decision-making. It also provides an opportunity to create contingency plans as a buffer to adverse legislative change. Legislative Action Property Tax Changes. Given the slowing of the State economy and the extent of past class rate compression, it is difficult to imagine further reductions in tax capacity. In 2001, we were reminded of the speed, magnitude and unpredictability of changes in the property tax system. Forecasts of future property values should use conservativ, e assumptions. Levy Limits. The current law imposes levy limits for only the next two years. The on again/off again nature of levy limits shows the risk of planning for a future without some form of limitation on the City's ability to levy property taxes. New Limitations. The Legislature has periodically considered new limitations on the ability of cities to levy taxes or incur debt. The most common form of new limitation is a reverse referendum petition. Residents could petition a city to conduct a referendum on certain matters. Non-Tax Revenues. The impacts of Legislative change are not limited to property taxes. In 2001, the Legislature reduced HACA, but increased Local Government Aid allocations to Elk River. It is impossible to predict the future of State Aid. The City should anticipate discussions Page 3