12/04/2006 Council Packet - Laserfiche WebLink

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• • WS -4 WORK SESSION MEMORANDUM To: Mayor and Council Members From: Al Rolek Date: December 4, 2006 Re: 2007 -11 5 -year Financial Plan - Draft CC: Gordon Heitke Attached is a draft of the 2007 -11 5 -year Financial Plan for discussion at the work session meeting on December 4. The plan was developed with the underlying values of meeting our obligations to the citizens of Lino Lakes, maintaining service levels, and holding the line on costs and taxes in a growth environment. The draft plan forecasts that the city tax rate will be reduced from 41.362% in 2006 to 39.970% in 2011given the anticipated rate of growth in the tax base. In light of the recent weakness in the real estate market, anticipated tax base growth was revised downward to 7% per year from the 10% per year of previous estimates. The tax base projections include both market growth and new construction, but do not include any unapproved developments, i.e. Hardwood Creek. This is felt to be a conservative estimate, as actual growth has been averaging about 11 -17% over the last several years. The net result is an overall growth in tax base of 45.52% over the five year period. The overall increase in expenditures for this period is of 53.42 %. A general inflation factor of 3% per year was used throughout the plan. A number of areas, such as energy, fuels, medical insurance, etc., were increased at a greater rate due to market conditions. The primary drivers for increases within the draft plan are staff additions, pavement management, capital equipment replacement planning, and energy costs. The Fire Protection budget anticipates increases of 5% per year in response to city growth. The completion of the transition from certificate of indebtedness financing to current financing of equipment replacement, eliminating future interest expense, is an