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MEMORANDUM <br />DATE: July 22, 2005 <br />TO: City Council <br />FROM: Mike Morrison, City Manager <br />Roger Larson, Finance Director <br />ITEM: FINANCIAL PLAN — PROPERTY TAXES 2006 <br />At our January 2005 goal setting, the City Council asked staff to develop a financial plan <br />to review alternatives to offset the imact of the 2006 tax levy. Those alternatives were <br />presented to Council at the March 14'. work session <br />At that meeting, Council established a goal to balance the 2006 - operating budget without <br />increasing the 2006 levy. The attached proposed operating budget totaling $4,177,500 <br />($208,500 increase) represents a balanced budget without an increase the general fund <br />levy for 2006. <br />The proposed increase in 2006 operating expenditures represents a 3.5% increase in <br />employee wages, pension contributions and other related benefits, a $30.00 increase in <br />the employer health insurance contribution and additional costs for fuel, utilities and <br />inflation. <br />Offsetting the Impact without increasing the levy <br />1) Some of our current capital equipment revenue line items were restructured and <br />transferred to the general fund. They included: <br />➢ Lauderdale Police Contract <br />➢ Falcon Heights Police Contract <br />➢ Water /Sewer Transfer <br />➢ Water Filtration Interest <br />2) In addition, New Line Items were added: <br />➢ Liquor Licenses <br />➢ Communications Lease <br />These sources of revenue are considered permanent revenues that are available each year. <br />The transfer of the line items represents a permanent restructure of the annual General <br />Fund Budget operating revenues. <br />