05/03/2010 Council Packet - Laserfiche WebLink

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• • WS -5 WORK SESSION MEMORANDUM To: Mayor and Council Members From: Al Rolek Date: May 3, 2010 Re: 2010 -2014 5 -year Financial Plan - Draft CC: Attached is a draft of the 2010 -2014 5 -year Financial Plan for discussion at the work session meeting on May 3. The plan was developed following the process approved by the City Council, with the underlying values of meeting our obligations to the citizens of Lino Lakes and maintaining service levels. The draft plan is a compilation of projected needs over the coming five -year period submitted by the department directors for their respective areas of responsibility. It anticipates an overall increase in expenditures of 8.1% for the five -year period. In light of the weakness in the real estate market, anticipated change in the tax base was revised downward from the previous plan, ranging from a 8.9% decrease in 2011 to a 2.0% increase in 2014, reflecting an anticipated market stabilization. The forecast includes both market adjustments and new construction, but does not include any unapproved developments. The net result is a tax base contraction of 20.44 %. Given this rate of contraction in the tax base, the city tax rate in the plan is projected to go from 38.732% in 2009 to 55.792% in 2014. The primary reason for the growth in the tax rate is the reduction in the tax base forecast. For the year 2011, most areas were forecast using a zero percent increase. Thereafter, factor of 1 — 2 % per year was used throughout the plan. A number of areas, such as energy, fuels, medical insurance, etc., were increased at a greater rate in accordance with market averages. Staffing levels were assumed to remain constant over the plan term. The primary drivers for increases within the draft plan are pavement management, capital