5.12 SR 04-05-2010 - Laserfiche WebLink

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Item # 5.12. .ver MEMORANDUM TO: Mayor and City Council FROM: Lori Johnson, City Administrator DATE: Apri15, 2010 SUBJECT: 2010 Budget Update The Legislature recently approved and the Governor signed a budget balancing bill that includes reductions to local government aids. Although the total reduction to cities is significantly less than the Governor's proposal, the reduction to Elk River is the same in either case. Elk River will lose an additional $186,915 of market value homestead credit aid payable in 2010. The City does not have an opportunity to make up for this revenue loss through additional taxes in 2010. Fortunately, after the City's budget was adopted, the Sherburne Wright Cable Commission approved extending payment of the franchise fees for an additional three quarters in 2010. As you may recall, the Commission unexpectedly approved payment of two quarters of franchise fees to its members in 2009 because of the financial difficulties its member cities were experiencing. Historically the Commission has retained all of the franchise fees. The payment to Elk River in 2010 is estimated to be $120,000. In addition to the franchise fee revenue, fuel costs are estimated to be approximately $40,000 less than budgeted due to the state fuel contract price. These two items will offset most of the additional aid loss. Further, the Council Contingency budget was increased by $43,000 (the result of budget reductions and adjustments) in anticipation of a further reduction in state aid. With the Council Contingency adjustment, the additional aid loss is fully covered. You may recall that when the budget was adopted $98,300 of expenditures were left in the budget but those funds were not to be spent until the status of state aid reductions was known. Of that amount, $14,350 was for staff training, $7,350 was for recreation supplies and programming, $13,000 was for delaying hiring of the engineering tech I, and $63,600 was for Microsoft licensing upgrades and training. At this time, I am suggesting that department heads be allowed to access the training and recreation funds totaling $21,700 since the state aid cut is fully funded. The remaining two items totaling $76,600 will be held until later in the year when we are confident that funds will be available to cover those items.