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ITEM 8. <br /> <br />'ity of <br /> <br />iver <br /> <br />MEMORANDUM <br /> <br />TO: <br /> <br />FROM: <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />Mayor and City Council <br /> <br />Pat Klaers, City Admi~or <br />September 4, 1996 <br /> <br />1997 Budget <br /> <br />The next City Council worksessions on the 1997 budget are scheduled for September 9 <br />and 11. At the end of the first worksession on August 26, 1996, all of the general fund <br />revenues and expenditures were presented and reviewed. As discussed on 8/26/96, the <br />current "budget gap" is $75,400. <br /> <br />This budget gap amount of $75,400 assumed that the city will increase its property tax <br />revenue in the 1997 general fund by $337,400. This is the same amount that the general <br />fund tax revenue increased last year and required an approximately 15 percent growth <br />in the city's net tax capacity (NTC) in order for there to be no change in the city's tax <br />rate. <br /> <br />On Friday, August 30, 1996, city staff was advised by county officials that the city NTC <br />is estimated to increase by 12.09 percent. This means that a city tax rate increase will <br />be necessary in order for the city to obtain the amount of general fund tax revenues that <br />was discussed at the budget worksession. To generate this amount of tax revenue would <br />require a 3 percent increase in the city tax rate. The city tax rate would go from 24.033 <br />percent to 24.765 percent. In spite of the city having a low total tax rate when compared <br />to similar communities, any type of tax rate increase must be looked at carefully. If the <br />city is to experience no city tax rate change for 1997, an additional $87,700 will have to <br />be cut from the tax revenues and proposed expenditures. <br /> <br />While tax revenues received a fair amount of discussion at the 8/26/96 worksession, the <br />other important element of the 1997 budget, personnel additions, did not receive much <br />discussion. Personnel additions and wage increases are in the City Council contingency <br />fund. The city tends to make the funding of personnel from the contingency fund "work <br />out" because new employees are usually hired throughout the year and not all at the <br />beginning of the year. The 1996 adopted and 1997 proposed Council contingency funds <br />are both $193,500. <br /> <br />13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 <br /> <br /> <br />