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/U4's , 1, $, /5/ /IP/ (7, y• <br /> Rep(Y +. No. 97— <.7I7O L5 <br /> August 1, 1997 <br /> To: Honorable Mayor and City Council <br /> From: Chuck Whiting, City Administrator <br /> Re: August 4, 1997 City Council Meeting <br /> I am writing this during the mediation session on the golf course. We are waiting for the judge <br /> to return after our first go around this morning. Anyway,here's what is on the agenda for <br /> Monday evening <br /> 1998 General Fund Budget: We will begin our budget discussions Monday evening with an <br /> overview of the initial budget projections for 1998. The expediture figures are based on first run <br /> department head estimates with nothing as of yet revised,nor with much discussion about <br /> revenue constraints. I have asked the department heads to put down what they feel they need at <br /> this time, and to prioritize their capital expenses. Some have not done this to date,and will need <br /> to in the next week or so(or risk me doing it for them). Bruce and I discussed how best to <br /> present an overall picture of the budget, and Council members will note the first few pages with <br /> the graphs and budget summaries. Our approach has been to first, isolate the most sensitive <br /> sources of revenues, being the tax levy and the franchise fee. The franchise fee expires at the end <br /> . of this year,so a Council action would be needed to extend. Franchise fee revenues for 1998 <br /> therefore are$0 for this point in the budget. As for the tax levy, for this point in the budget,it <br /> has been left at the 1997 levy amount Late Thursday I received our maximum allowable levy <br /> notice from the Department of Revenue, which will allow the City to increase the levy <br /> approximately$90,000 if desired. With the absense of the franchise fee an no increase in the <br /> levy,we currently have a funding gap of around$390,000. Closing this gap will be the main <br /> effort of the coming weeks. <br /> Options that will exist are the normal ones. Increase taxes,decrease expenses and services,seek <br /> efficiencies, and dip into reserves. The long term impacts of those choices are policy decisions <br /> for the City to make,so we have attempted to put some of that into perspective with long term <br /> projections based on some assumptions listed on the initial page of the budget packet you <br /> received this past Monday evening(please bring that to the meeting August 4). The figures <br /> given on Monday reflect no franchise fee and moderate tax increases over the next 10 years with <br /> other expense and revenue assumptions made. The critical factor to keep in mind from the big <br /> picture standpoint is to level out the equity fund balance (essentially the City's reserves) over the <br /> long run. While it looks dramatic now, reaching zero in a few years,it would be very healthy for <br /> the Council to give some consideration to the ramification of the Ievel of these funds. Roughly, <br /> the City has attempted to maintain at least six months worth of equity for cash flow purposes,but <br /> capital planning is a large component of this policy type decision. All this will be easier to <br /> discuss Monday evening. <br /> If the above considerations tions can be understood Monday,the other question the Council may want <br /> to review is what if any other(besides franchise fee)concerns does the Council want staff to <br /> E/Z 3pdd 0LE6LEEZL9°QI N3l'VNO VAa3NN'3M=wnx4 / n = f,T / a-Tn-new <br />