11/03/2008 Council Packet - Laserfiche WebLink

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light of the collapse in the real estate market, and based on information from the city assessor, anticipated growth in the tax base was revised downward from the previous plan, ranging from -5% to +2% over the plan period, reflecting a return to slow growth in years 4 and 5. The tax base forecast includes adjustments for both market fluctuation and new construction. In addition, TIE' District 1 -9 will decertify during this period and adjustments for adding the district value to the general tax base are included in the analysis. The net result of the analysis is an overall growth in tax base of 4.13% over the 5 -year period. Given this rate of growth in the tax base, the city tax rate in the plan will adjust from 38.967% in 2008 to 44.196% 2011 through 2013. The primary reason for the growth in the tax rate is the reduction in the tax base forecast. The tax rate was held at the 2011 level pending further discussion with the Council. 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 and personnel costs, energy and fuel costs, pavement management, and capital equipment replacement planning. The Fire Protection budget anticipates increases of 5% per year in response to city growth. Planning for long -term capital outlay is continued throughout the term of the plan. Anticipated staffing needs of 14.25 employees, with related benefits and other personnel costs, are included from 2009 — 2013. You should also be aware that certain assumptions are made with regard to certain staff additions. For example, it is anticipated that Homeland Security grants and additional COPS grants will be available to offset the cost of adding police officer positions each year. If these funding sources are not available, the addition of these positions will be re- evaluated in future revisions of the plan. Also, additional police supervisory positions are conditioned on the addition of patrol officers. In reviewing this draft plan on Monday night, staff is seeking direction from the City Council in its vision for the future of the city and how it will be managed financially. While this is important in considering the current plan, the trend that has emerged makes strategic planning imperative to the sound financial operation of this city. To this end, staff feels that a strategic planning initiative should be undertaken early in 2009 and be continued to a satisfactory completion to determine the Council's strategic priorities and direction for the City, which will be especially important in preparing the 2010 budget and future revisions of the 5 -year financial plan. It must be recognized and reiterated that this is a financial plan, not a budget, and it does not constitute authorization for future spending. The city budget will continue to be prepared annually, and current needs will continue to be presented to Council on an annual basis. While it is Council's, and staff's, intention to be fiscally responsible, it is possible that future budgetary needs may differ from what is outlined in the five -year plan, resulting in a tax rate higher or lower than anticipated in the plan. Likewise, the five -year plan will be updated each year and city needs reassessed at the time of renewal. • • •