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• <br />• <br />WS -5 <br />WORK SESSION MEMORANDUM <br />To: Mayor and Council Members <br />From: Al Rolek <br />Date: November 4, 2011 <br />Re: 2012 -2016 5 -year Financial Plan — 1st Draft <br />CC: <br />Attached is the 1st draft of the 2012 -2016 5 -year Financial Plan for discussion at the <br />work session meeting on November 4. The plan was developed following the process <br />approved by the City Council, with the underlying values of meeting our obligations to <br />the citizens of Lino Lakes and maintaining service levels. <br />The draft plan is a compilation of projected needs over the coming five -year period <br />submitted by the department directors for their respective areas of responsibility. It <br />anticipates an overall increase in expenditures of 17.93% for the five -year period. In <br />light of the weakness in the real estate market, anticipated change in the tax base was <br />revised downward from the previous plan, ranging from a 5.0% decrease in 2012 to a <br />0.0% increase in 2016, reflecting an anticipated market stabilization. The forecast <br />includes both market adjustments and new construction. The net result is a tax base <br />contraction of 13.45% over the five -year period. Given this rate of contraction in the <br />tax base, the city tax rate in the plan is projected to go from 42.778% in 2012 to 57.445% <br />in 2016. The primary reason for the increasing tax rate is the reduction in the tax base <br />forecast. <br />Following the year 2012, a factor of 0 - 2 % per year was used throughout the plan for <br />most expenditure projections. A number of areas, such as energy, fuels, health insurance, <br />etc., were increased at a greater rate in accordance with anticipated market adjustments. <br />Staffing levels were assumed to remain constant over the plan term. The primary drivers <br />