Agenda Packets - 1983/05/23 - Laserfiche WebLink

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TO: Mayor 5 Council NJFROM: Finance Director -Treasurer Urager Clerk -Administrator Pauley 04 J DATE: ,Tune 1, 1983 RE: 1984 BUDGET POLICY CONSIDERATIONS To assist staff in preparing the first draft of the 1984 budget we would appreciate Council's consideration and direction on several policy issues. We would emphasize that whatever policy guidelines are adopted for this first draft are subject to modification. Ames later drafts and revenue estimates are developed initial 9 uidelmay need to be modified. Energy costs are a major item in the City 's budget. To develop guide- lines, staff talked with our suppliers and also obtained data from the Minnesota Energy Agency. Our Commercial Account Representative at NSP advised if he were budgeting for 1984 he would budget a 10% increase in electricity rates and a 12% increase in natural gas rates. Data from the Minnesota Energy Agency indicates that this is a reasonable estimate and staff recommends using those figures in preparing the 1984 budget. Present prices paid for motor fuels are: regular gasoline, $1.1225; unleaded gasoline, $1.1525; and propane, $0.72. The Minnesota Energy Agency projects these costs at the end of 1984 to be; regular gasoline, $1.35; unleaded gasoline $1.40; and propane, $0.85. Staff recommends these figures be used for budget purposes. Deregulation of Bell Telephone has made estimation of future charges difficult. Our Commercial Account Representative at N.W. Bell advises that rates will be adjusted in 1984 and commercial customers will have the option to purchase their existing phone systems. At the present time the company can not give us any indication what costs might be. Staff will monitor this situation and advise of any developments. For purposes of the first draft of the budget staff recommends using present rates increased by 10%. Our auditors have recommended that the general fund's fund balance be $562,000. As of 12-31-82 the actual balance was $391,767. This is $170,233 short of the recommended amount. Staff concurs with the auditors recommendations that the fund balance should be increased to maintain financial strength and independence. Staff thus recommends that $25,000 be budgeted for fund balance development. A contingency is necessary for unforseen circumstances and emergencies. Staff recommends that $25,000 be budgeted for contingencies. This amount is approximately the same amount that has been budgeted in past years.