Agenda Packets - 1984/05/29 - Laserfiche WebLink

Home Browse Search

dtLV"-- 1 3. MEMO TO: Mayor and City Council ' FROM: Finance Director -Treasurer Brager DATE: May 31, 1984 i SUBJECT: 1985 BUDGET POLICY GUIDELINES To assist staff in preparing the 1985 Budget your consideration and direction on several policy issues would be appreciated. This approach was followed during last year's budget preparation process and was a great aid in preparing the first drafts of the 1984 budget. As in the past these guidelines are subject to modification at any time during the budget process. Energy costs are a major item in our budget. Staff talked with our suppliers about future costs and reviewed estimates of future energy prices developed by the State Energy Agency. Based upon information from those sources staff feels that an 8% increase in electricity and a 68 increase in natural gas rates is probable for 1985. Present prices paid for motor fuels are: regular gasoline @ $1.079; unleaded gasoline $1.109; and $ .82 LPG. The Minnesota Energy Agency projects these costs during 1985 to be: regular gasoline $1.35; unleaded gasoline $1.40; and $ .85 LPG. Staff recommends these figures be used for budget purposes. The Implicit Price Deflator is an index of the costs of goods and services that governments actually purchase. It is used by the Minnesota Department of Revenue in the calculation of the levy limits of Minnesota Cities. At ,the present time it is estimated that it will be 5.7% on June 30, 1984; that figure is used in the levy limit calculation. In addition any increase in the number of households and/or population is used in adjusting the levy limits. That data is provided by the Metropolitan Council and will not be available until mid July. Staff feels that the Implicit Price Deflator and population increase should be a goal as far as an increase in the property tax levy is concerned. Therefore, staff suggests a goal of attempting to limit the overall property tax increase to 5%. Preliminary General Fund revenue estimates, using a 59 property tax increase as a guideline, result in 1985 revenues being 3.21% more than 1984 revenues. The reason overall revenues are not 58 is that our 1985 local government aids are "frozen" at the 1984 level. Had local government aid increased by 5% our overall general fund revenues would have been approximately 5%. Staff recommends first draft budgets be prepared using as a guideline a 5% increase in the property tax levy.