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WS — Item #1 WORK SESSION STAFF REPORT Special Work Session Item No. 1 Date: August 10, 2015 To: City Council From: Jeff Karlson Re: 2016 Draft Budget and Tax Levy Background Transmitted for your review and discussion is the first draft of the 2016 budget and tax levy proposal. The draft was prepared by department directors and reviewed by the City Administrator with the intention of providing the resources needed to maintain city services. The draft also incorporates the priorities and initiatives identified by the City Council. Included in the draft are resources needed to continue City services at their present levels and to continue the City's efforts toward street maintenance, public safety, park improvements, and capital equipment replacement. The budget assumes employee wage adjustments of 2.5% and increases to the City's contributions for insurance benefits. New public safety positions are included in the budget. Increases in fuel costs, utilities, and professional and contractual services are reflected in the draft. Expenditure estimates in all areas generally represent what is needed to continue services at their current levels. The draft budget includes a general property tax increase of $1.43 million. A summary of the changes affecting the 2016 budget will be sent out later this week in the form of a General Fund Forecast Gap Analysis, which is usually prepared by the finance director. Finance staff is still putting together the debt levy schedule that should be ready by the end of this week. The 2015 budget included the use of $170,000 in fund reserves and the transfer of $480,894 into the General Fund from the Closed Bond Fund to cover startup costs for fire services. Preliminary Tax Levy Property values have increased by only 0.36% for taxes payable in 2016. The total net tax capacity value is $18,474,127. Finance does not have all the numbers from the County to calculate the projected tax capacity rate. We expect to have them by the end of next week. Attachments 2016 Draft Budget