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HomeMy WebLinkAbout2.a. 2003 Budget Updater CITY OF ROSEMOU'NT EXECUTIVE SUMMARY FOR ACTION COMMITTEE OF THE WHOLE MEETING DATE: January 15, 2003 AGENDA ITEM: 2003 Budget Update AGENDA SECTION: PREPARED BY: Jeff May, Finance Director AGEN nW ATTACHMENTS: Budget Update Memo APPROVED BY: For your discussion this evening is the City's 2003 budget situation in. relation to the State's deficit situation. Attached for your consideration and discussion is a memo outlining some of the issues and how the City might be able to address them. This is an item that you will be updated on a monthly basis as the State addresses their deficit situation and how that will impact the City. RECOMMENDED ACTION: Discussion only. COUNCIL ACTION: 4* MEMORANDUM DATE: January 9, 2003 TO: Gary Kalstabakken, Interim City Administrator FROM: Jeff May, Finance Director SUBJECT: 2003 Budget Update For your review is an update of the City's 2003 budget and how we may deal with the loss of the State's Local Government Aid (LGA). At this point in time, we are scheduled to receive $402,142 in LGA. We do not know how much of this aid we will lose, although it appears likely we could lose all of it. Prior to approving the 2003 budget, staff had identified approximately $500,000 worth of items in the General Fund and CIP Funds budgets that we would could recommend for possible cuts /postponements if necessary. At this point in time we are looking at the following items to address most of the $400,000 in LGA losses: 1) $143,142 from the Street CIP — These funds are listed under "CIP Reserves — Future Street Projects" and are not identified for any specific purpose at this time. 2) $1.14,105 of Additional General Fund Revenues — We have "project" funds that owe the General Fund and the Utility Funds 5% administrative fees. In the 2003 budget the General Fund is scheduled to receive $100,000 of these fees. The fees that we have to pay the General Fund exceeds the $100,000 by $114,105 which we would recommend to use as an offset to part of the LGA losses. 3) $12,000 from the Council Budget fora "Planning Consultant" — This was a carryover from previous budgets and has not been identified for a specific purpose in 2003. 4) $5,000 from the General Government Budget for "Broadcast of Port Authority Meetings — Because of the uncertainty of the number of meetings the Port Authority will require staff feels that this is not necessary at this time. 5) $30,000 from the General Government Budget for "Cable Television Programming — Staff feels that it would be unwise to add a service that nobody currently has when we could be looking at cutting services in the future. 6) $17,500 from the Community Development Budget for a "Planning Intern" — With the addition of an Assistant Planner the need for a Planning Intern is eliminated for the short term. 7) $20,000 from the Equipment CIP for a "Motor Pool Vehicle" — Staff feels that we can get by keeping one of the old squad cars that are normally sold at auction instead of purchasing a new additional vehicle. These items total $341,247 of the $402,142 in possible LGA losses. We feel that the additional dollars will be recovered through excess Administrative Fees and /or Building Permit Revenues. 2003 Budget Update — Page 2 One other issue that may need to be addressed in the future is the City's Market Value Credit. These are dollars that we actually levy to the County and the State reimburses us directly thereby reducing tax bills. In 2002, we received approximately $460,000 for these credits. At this point, we are not sure how the State would handle the cut of these credits. If they were to take away the credits the County could recalculate our levy the way it was originally certified or we could possibly just lose these funds as well as the LGA. At this point in time the discussion on this item as been very limited so staff feels that if this were to become an issue later in the year we would look at the current revenue /expenditure situation for possible resolutions or look to using our fund balance to address this issue. We would have sufficient funds to address the market value credit cuts without putting us in a dangerous financial position. We would have to look at budgets in future years if the State did not allow us to recoup the LGA or market value losses in our levies.