City Council Agenda and Packet 2010 10 12 SP 2011 BUDGET

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L cityof Louisville COLORADO SINCE 1882 October 1, 2010 Mayor and City Council City of Louisville 749 Main Street Louisville, CO 80027 Dear Mayor and City Council: Office of the City Manager As required by Section 11 -2 (b) of the City Charter I am pleased to offer for your consideration the 2011 proposed budget. The "Great Recession" has created many fiscal challenges for the City of Louisville. There are also many issues that create uncertainty as you consider what the 2011 budget should include. However, thanks to the more than 50 specific actions that you 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 34% 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. However, if Proposition 101 and Amendment 60 pass, it will require dramatic changes in service levels to reduce the City's expenditures on par with the projected $1,498,232 negative impact those two measures would have in 2011. On the other hand, if Louisville voters approve the Use Tax that is on the November ballot, and ConocoPhillips begins construction of their new campus in 2011, there will be an equally dramatic positive impact on the City's budget. The context of these potentially dramatic negative and positive events is what has led staff to propose a budget that simply 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. If either Proposition 101 or Amendments 60 or 61 pass, we will have to revisit the budget and make extensive cuts to programs. Similarly, if the Use Tax passes, it will create the opportunity for the City Council to revisit the budget and appropriate sufficient 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. Regardless of what the future brings, I am confident that you will continue to demonstrate the sound judgment and strong leadership that has served the City so well in this challenging economic environment. Guiding Principles In June of last year the Council agreed on the following guiding principles for the budget: Guiding Principles 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 1 15