09-10-2003 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL SEPTEMBER 10, 2003 PRELIMINARY The City Administrator presented the preliminary 2004 Budget and 2004 BUDGET requested that the Council take action this evening to certify the preliminary 20041evy. The Administrator informed the Council that staff's recommendation is to levy to the City's State-imposed levy limit of $2,132,880, The Administrator noted that as part of the State's budget crisis, aid to cities was cut. The State's aid cut for Little Canada was $196,000. The State is allowing cities to levy back up to 60% of this lost aid. The Administrator pointed out that the preliminary 2004 Budget proposes a 6.3% increase in the gross levy, which translates to a 7.36% increase in the net levy. All of this levy increase is attributable to the recovery of lost State aid. However, given that the City's tax capacity (tax base) has grown by over I 1%, our tax rate will actually drop by 3.25%. The Administrator pointed out that the State will use 2003 levy amounts in determining levy limits going forward. Therefore, staff is recommending levying to the State-imposed levy limit to ensure that the appropriate base level is set. The Administrator noted that Ramsey County is levying to its levy limit, as are many other municipalities. The Administrator also pointed out that the State will likely have continuing budget pressures; therefore, additional aid cuts to cities are likely. Anderson asked what other aid are potential targets for State cuts. The City Administrator felt the main target would be the Market Value Homestead Credit. Other potential aid cuts would be PERA Aid, Fire State Aid, and MSA dollars. The Administrator suggested that another potential target would be city fund balances. The State has discussed county, school district, and city unreserved fund balances, and sees these dollars as a potential source of money that could be drawn down. The Administrator noted that Little Canada has no unreserved fund balances. He also explained that given the City only received tax dollars from the County twice each year, the General Fund investment balance is used to finance City operations for six months and prior to receipt of its first tax settlement check. The Administrator pointed out that one hears use of a business analogy for the way government sector should be run. The Administrator pointed out that when businesses are facing difficult financial times, the business operation could be cut back as a result of operational slowdowns. The government sector cannot do that, and cities have to continue to provide police and fire protection, plow streets, service utilities, etc. The Administrator noted that during difficult financial times, there is typically an increase in demand for public services. Fahey noted that the City does