Agenda Packets - 2011/06/06 - Laserfiche WebLink

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The state began the legislative session with a $5 billion deficit for the 2012/2013 budget period beginning on July 1, 2011. Staff recommends that we anticipate that the LGA and MVHC will be reduced at the same level as 2010 of $499,714. Inflation is moderate at present and the state levy cap will not be effective for 2012. The City’s charter cap is more restrictive and excludes debt service and capital project levies from inclusion in the cap calculation. A 1% levy increase would generate an additional $41,814 in tax revenue. The maximum the levy could increase under the City Charter is 4% – 4.5% depending on inflation and excluding debt service and capital projects. ($167,256 to $188,163) The City will be negotiating with the four bargaining units for the 2012/2013 contract years. 14 employees will receive step or longevity increases in 2012. The 2010 and 2011 budgets provided for no cost of living wage increase. The City laid off the Community Development Director in early 2011 due to greatly reduced permit revenue and with the anticipation that future permit revenue would continue at a reduced level for some time. This layoff will help off-set any additional cuts to state aid for 2011. The economy is still very fragile and has seen very slow growth. Health insurance cost increases are not known, we will receive our rate notice in mid August. The impact to the budget will depend on the labor contracts. The City’s health insurance contribution increased $35.13 in 2011 to $867.33 per month. The employer share of PERA will remain at 7.25% for Coordinated plan members and 14.4% for Police for 2012. PERA coordinated rates have increased from 5.53% in 2005 to 7.25% in 2011, police PERA rates have increased from 9.3% in 2005 to 14.4% in 2011. The payroll cost for 48 FT and 2 PT employees is $2,152 per hour, $17,216 per day, $86,080 per 40 hour week and $4,475,160 per year. County dispatch fees will increase $13,044 or 16.91% to $90,188. Fire department costs will most likely increase in 2012 after being flat for 2 years. Information technology costs will increase for 2012 by about $3,600 after 3 years of no increase. Fuel prices were budgeted at $3.25 for 2011, staff would recommend using $4.50 for 2012 this will add $27,125 to the General Fund budget. Overall most revenues that are tied to economic activity will be flat. Investment income will remain flat to slightly increasing in 2012 as a result of Federal Reserve activities and the threat of inflation. The franchise fee rate is at 3.87%; the revenue generated from this fee will be dependent on commodity prices and economic activity in 2012. 2010 General Fund reserves are $2,820,035 this represents 49.82% of 2011 budgeted expenditures and transfers. Fund balance increased by $63,519 for 2010 as a result of