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City Louisville COLORADO • SINCE 1882 November 22, 2010 Mayor and City Council City of Louisville 749 Main Street Louisville, CO 80027 Dear Mayor and City Council: Office of the City Manager I am pleased to present to you the 2011 Annual Operating and Capital Budget. The City of Louisville Municipal Code section 3.04.030 states that the City Council shall adopt an annual budget for each fiscal year in accordance with the procedure set forth in the Local Government Budget Law of Colorado, (Code 1962, 6.2: Code 1977, 3.04.020). City Council formally adopted the 2011 Budget on November 1, 2010 by passing Resolutions 66, 67. and 68. The "Great Recession" created many fiscal challenges for the City of Louisville. There were also many issues that created uncertainty as we considered the 2011 budget. However, thanks to the more than 50 specific actions that were approved in late 2009 and earlier this year to bring the City's 2010 expenditures and revenues back into balance, staff estimates that the City's General Fund will end 2010 with nearly $4.6 million in reserves, or about 35% of annual expenditures. Those reserves should enable the City to transition smoothly to a somewhat lower level of service if the recession continues to erode the City's revenues. This budget and all related material were prepared prior to the defeat of Amendment 60, 61, and Proposition 101 on November 2. Amendment 60 and Proposition 101 were projected to have a negative fiscal impact of nearly $1.5 million in 2011 and we are grateful that voters rejected these measures. On the other hand. this budget was also prepared prior to the voters' approval of the Consumer Use Tax, which will take effect on January 1, 2011. The Use Tax allows City Council the opportunity to revisit the budget and appropriate additional funds to address some deferred maintenance — especially on the City's streets —and to possibly restore some, but not all, of the programs and service levels that we have had to eliminate in the past several years. Guiding Principles In June of 2009, the Council agreed on the following guiding principles for budget development: 1. Provide high quality core services; do it well or don't do it 2. Talented, motivated, well- trained employees are the City's most important asset 3. Maintain our investments 4. Don't expect short-term actions to resolve long -term problems 5. Consider unintended consequences 6. Share information and ask employees, residents and businesses for their input and remember that Leadership is what they expect from us We have kept these principles in mind as we prepared the 2011 budget. As you know, the City's budget is the most significant policy considered by the Louisville City Council each year; it establishes the City's priorities and provides funding to achieve those priorities. The budget process, including the formal public hearing, provide the public with many opportunities to 1