City Council Minutes 2018 07 12 & 08 02 BUDGET

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City Council Budget Retreat Meeting Minutes July 12 & August 2, 2018 Page 2 of 13 Director Watson reviewed the proposed revenue assumptions for the 201920 budget. He noted the expenditure turn back was 7% over projection which allowed us to begin the year with $1.5M more than anticipated in revenue. Director Watson reviewed the various funds individually. REVENUE Watson stated staff is currently assuming a 4% growth for sales tax assumptions. He asked if that number is acceptable to Council. Councilmember Stolzmann noted Hobby Lobby is closed and Lowes might close so this number might be too aggressive. City Manager Balser stated staff feels comfortable with 3% given the unknowns, but that it is up to Council. Councilmember Leh asked what trends other municipalities are seeing. Director Watson stated many are concerned about a drop off in 2019 and later. Many communities are experiencing flat growth now. Councilmember Maloney stated he supports 3%. Mayor Muckle supported 4%. Mayor Pro Tem Lipton stated expenditures will likely rise faster than revenues so maybe a smaller number is better. Councilmember Leh and Councilmember Loo agreed. Members decided to use the 3% rate. Director Watson reviewed the revenue assumptions for all funds. Councilmember Loo asked if building permit fees will be affected by the recent hail storm. Director Zuccaro stated most all of the fees we take in will be offset by the temporary staffing needed to process and inspect those permits. Members discussed property tax and options related to the mill levy and options on paying back the recreation center bond issue. EXPENDITURES Director Watson noted wages are targeted at a 5% increase per year 2019 — 2024; this does not account for any new positions. This cost is about 50% of all General Fund costs. This will be clarified as new position requests are incorporated. He also reviewed the projections for benefits: 6%; supplies: 4%; purchased services; 7%. Director Watson reviewed the long-term fund forecasts for each fund. He noted the Golf Course fund cannot support the Tong -term lease or CIP projects they are asking for and this may require a transfer from other funds.