City Council Agenda and Packet 2010 10 19

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City Council Meeting Minutes October 5, 2010 Page 7 of 13 Items of concern: Proposition 101 and Amendments 60 and 61, sales tax instability; property tax instability and the impact of the state budget crisis on municipalities. Areas of opportunity: the potential for the passage of the use tax and the development of the ConocoPhillips property. The 2011 Budget Focus on the following areas: Maintain current level of service; maintain fund reserves to provide resources as needed in the uncertain economic climate. The major city funds include the general fund, capital projects fund, special revenue funds, conservation trust — land acquisition, conservation trust — lottery, enterprise funds: water, wastewater, stormwater, golf course, solid waste & recycling utility; internal service funds and debt service. The 2011 budget maintains the current level of service and, when the year -end turnback is factored in, keeps General Fund expenditures slightly below anticipated revenues. That will enable the City to weather the current economic conditions. When the outcome of the November elections is known, the budget can be revisited if necessary. Until then the following issues are significant: Compensation, Benefits and Training; Merit Increases; Medical Insurance Coverage and Other Benefits. Given the continuing economic trends, and the uncertainty with measures on the fall ballot, Staff is not proposing at this time to restore any of the service cuts implemented in late 2009 and early 2010 to reduce expenditures to fit within available revenues. The 2011 budget includes a total revenue projection (excluding interfund transfers) of $26.8 million for all funds, which is a decrease of 5.7% over the estimated revenue for 2010. Net property tax revenue is projected to remain at $2.9 million. City Staff expects sales and use tax revenue to decline by 2.5% in 2010 and an additional 1`)/0 in 2011. The 2010 budget includes a 3% increase in water rates and wastewater rates, and a 25- cent per month increase in storm water rates. The 2011 budget includes total expenditures (excluding interfund transfers) of $28.9 million. Included in this amount is $21.4 million for operations, $2.6 million for debt service, and $5.2 million for capital outlay. Total appropriations for all funds, including interfund transfers, are $30.2 million. The General Fund expenditures for 2010, excluding interfund transfers, are projected to decline by nearly $200,000. General Fund expenditures for the 2011 proposed budget, excluding interfund transfers and assuming a 3% "turnback ", are budgeted to decline by an additional $200,000. The only significant increases in the General Fund budget are the result of electricity costs going up 8% and a potential 10% increase for medical insurance. Total General Fund expenditures are over $300,000 less than anticipated revenue (assuming 3% year -end turnback). In 2011 the policy of maintaining a General Fund reserve of at least 15% of current year expenditures will be continued. Staff expects to maintain a General Fund reserve of $4.6 million or about 34% of current year expenditures. 10