Agenda Packets - 1999/10/04 - Laserfiche WebLink

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October 1, 1999 To: Honorable Mayor and City Council From: Chuck Whiting, City Administrator Re: Year 2000 General Fund Budget Discussion For the work session Monday, I thought it would be helpful to touch on the budget issues I think the Council either should be interested in or provide direction for. The list attached to the agenda identifies the major issues and I will attempt to address them here. Franchise Fee The franchise fee is currently 2.5%, and as reviewed with the Council previously, the direction set by the past Council was to phase the fee down to zero by reducing the percentage by .5% every other year. Year 2000 would be the next year for reducing another .5%. The amount plugged into the preliminary budget however is still the 2.5%. This figure remains to balance the budget with all the other projected revenues and proposed expenditures. With this in mind, the issue naturally becomes one of whether all the expenditures should remain as proposed, whether revenue projections are accurate or whether the franchise fee is considered appropriate. Additionally, as the Council has also reviewed, changes to the City's street policies for assessments has brought up the option of increasing the franchise fee with the additional amount being dedicated to streets improvements. The Council has the option of increasing the percentage to 4%, an amount that would generate about another $125,000 a year. If a fund was to be generated for this purpose, some work would be needed to determine a fund cash flow for meeting the improvement costs in question. It would take eight years to accumulate $1,000,000, which if generating 5% interest or $50,000,probably wouldn't go real far to paying for necessary improvements. Another option would simply be to apply the $125,000 a year to street improvements and forego generating the dedicated fund. Another option altogether would be to further investigate using current tax increment funds that could be determined outside the constraints of normal of use and dedicating those funds to street improvements. Doing that would require evaluation of the City's economic development concerns relative to streets needs, or even other general fund issues. As summary of the options therefore would look like this: Option 1: Retain franchise fee as is. Option 2: Reduce franchise fee by .5% and reduce expenditures or increase other revenues to make up the difference. Option 3: Increase the franchise fee with the additional amount offsetting other needed city expenses. Personnel Costs Anyway it is cut, personnel is largest collective item in the general fund. For 2000, the City will be facing negotiating the two police collective bargaining agreements. Public works personnel will be in the second year of their agreement in which a 3% wage increase was agreed to this time last year. The remaining employees traditionally have increases in line with the collective bargaining groups. With the turnover we have had, and continue to have, we may actually see some short-term savings in direct personnel costs, but that is offset by recruitment expenses and to a less tangible degree, the learning curve facing new hires.