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1996 Budget Discussion <br />September 5, 1995 <br />Page 2 <br />minutes related to annual review of this ordinance or an annual inflationary <br />increase. <br />On 8/28/95 the City Council requested additional information regarding the <br />Community Education pool program and the city's contribution of $4,000 <br />annually to this program. A memo from Community Education Director <br />Charlie Blesener regarding this issue will either be included in this packet or <br />will be handed out on Tuesday. <br />The main purpose of this meeting on September 5, 1995, is to close the <br />budget gap. The amount of the budget gap that needs to be closed is open to <br />discussion by the City Council. The amount depends upon the desire of the <br />Council to have the Truth in Taxation notices show a no tax rate change <br />versus approving a tax levy that shows a modest increase in the tax rate, <br />with the understanding that this is the proposed maximum levy and that <br />this amount cannot be raised but can be reduced in December. <br />Staff supports the modest tax rate increase approach. This approach is <br />suggested in case the net tax capacity (NTC) growth varies from the 15.06 <br />percent increase that has been estimated by the county auditor. For <br />example, if the City Council approves a net levy amount based on a hold the <br />• line approach, and, if the actual NTC growth is higher, the city tax rate goes <br />down. On the opposite side of this situation, if the City Council approves a <br />net levy based on a hold the line approach, and if the NTC growth is lower <br />than 15.06 percent, the city tax rate will go up. In the later case, the Council <br />can lower the tax levy in December, but in the first case, the Council cannot <br />increase the tax levy in December in order to get the maximum tax revenue <br />without a tax rate change. <br />Another reason for approving a tax amount that would increase our tax rate <br />slightly based on 15.06 NTC growth is because we can reasonably find <br />$60,000 or so in budget amendments, but it is more difficult to find a total of <br />$102,000 in adjustments. <br />In looking at closing the budget gap, the Council is cautioned to not cut <br />capital outlay expenditures that are programmed to be financed by <br />equipment reserves. In this regard, the Council should refer to the capital <br />outlay page that was distributed at the 8/28 meeting. If an item is cut from <br />this list that is scheduled to be funded by equipment reserves, then there will <br />be no net gain in closing the budget gap unless the Council decides to use the <br />reserve amount for another capital outlay. On 8/28, staff presented the <br />Council with a budget page that outlined how the additional Utilities funds <br />(a reserve) are planned to be spent. It is now suggested that the $40,000 in <br />General Fund equipment reserve transfers be shifted to this new equipment <br />reserve budget page and that the related expenditures are also transferred <br />