CC AGENDA 09302003 - Laserfiche WebLink

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• MEMORANDUM DATE: September 3, 2003 TO: Mike Mornson, City Manager FROM: Roger Larson, Finance Director ITEM: COMMUNITY SERVICES DEFECIT Per your direction, I completed an analysis to determine the cost of the City supporting the $54,000 Community Services levy versus the present cost of the School District's levy. It is my understanding that effective July 1, 2004, the School can no longer levy the cost of Community Services and the School Board has asked the City to absorb the levy. The question was asked, "if the School reduced its levy by $54,000 and the City increased theirs by $54,000, would the cost be the same to the residents?" To determine the answer, I worked with Hennepin County. The result is as follows (the • analysis is based on 2003 collectible taxes): $200,000 St. Anthony Home $2,000—Tax Capacity Annual School Tax for Community Services $16.12 Annual City Tax for Community Services $21.32 Amount of Annual Increase $ 5.20 The increase is because the City has a lower tax capacity ($5,067,038) compared to the School's $6,143,961 (their base includes part of New Brighton). In addition, because of strict levy limits in 2004, the City could not absorb this into its budget until January 2005. This equates to a funding gap of$27,000 for one-half of the year 2004. The options for funding the gap could be as follows: 1) School funds the deficit for 2004. City absorbs the levy in 2005. 2) City funds gap/absorbs the levy in 2005: a. Dedicates budget reserves from 2003 budget. b. Transfer 2003 —Liquor Profits. • c. Appropriate funds from Tires Plus Building Fund (remaining balance at 6/30/04 will be approximately $316,108.00.