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Item No: 7.C. Meeting Date: July 13, 2009 Type of Business: Council Business Administrator Review : ____ City of Mounds View Staff Report To: Honorable Mayor and City Council From: Mark Beer, Finance Director Item Title/Subject: First Reading and Introduction of Ordinance 824, Adopting a Five Year Financial Plan for 2010 thru 2014 Introduction: The City Charter, Chapter 7.05, requires that a five year financial plan be prepared annually. It must be presented at a public hearing and adopted by ordinance. The components of the Five Year Financial Plan are attached for first reading and introduction of ordinance number 824. There are several components to the Five Year Financial Plan: the General Fund Multi-year Operating Budget, the Vehicle & Equipment Replacement Plan, the Capital Improvement Program, the Impact on Capital Projects Funds’ Cash Balance, and Utility Rate Studies. This five year plan should be considered a work-in-progress and a guide for Council and Staff to make longer range decisions. As new information becomes available and conditions change we can update the components to determine the long range affect. General Fund Multi-year Operating Budget: The multi-year operating budget for the General Fund includes a reduction of Local Government Aid for 2009 of $147,000 and $340,000 for 2010. The Legislature has restricted levy increases thru 2011. The 2010 levy restriction limits levy increases to approximately .84% with a number of exceptions including an allowance to levy for unalloted Local Government Aid. This would allow the City to levy above the state levy restriction as a result of unalloted funds in 2008 and 2009 of $295,000. The City’s charter does not allow this exception but does allow increases related to capital expenditures and debt service. The City was prevented from increasing our levy for the Street and Utility Improvement Program in 2009 as a result of the state levy restrictions, because of the unallotment exception the City will be able to levy for the Street and Utility Improvement Program. It will not be the $400,000 that was anticipated in the financing program but could be in the $250,000 range. When possible staff used known amounts instead of projections. The 2010 levy reflects a 2.5% increase over the previous year’s levy which would be within the City charter restriction. The levy amount may be adjusted as we develop the 2010 budget and better information becomes available. This version of the budget assumes that there will be no additions to personnel or other major changes in operating expenditures.