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n EN HILLS MEMORANDUM DATE: December 8, 2005 Agenda Item 7.A TO: Honorable Mayor and City Council FROM: Murtuza Siddiqui, Finance Director/Treasurer SUBJECT: Proposed 2006 Budget BACKGROUND: At the June 20, 2005, August 15, 2005, September 19, 2005, and November 21, 2005, Work Sessions,the Council provided staff with guidelines to initiate work and to prepare a Preliminary 2006 Budget. At these meetings, the Council provided staff with general guidelines and based on these guidelines, a draft preliminary budget was presented at the September 19th Work Session for discussion. The current version of the budget reflects discussion items from the September I9th and November 21St meetings, including changes to the City's Health Plan. On September 12, 2005, the Council adopted a preliminary Tax Levy in the amount of $2,523,737. The County has received the certification notice. On December 5, 2005,the City held the Truth in Taxation meeting. At the conclusion of the meeting, the mayor announced that hearing has been concluded and that there was not a need to schedule a follow-up meeting as no issues or concerns surfaced during this meeting. DISCUSSION: The attached 2006 Proposed Budget has projected expenditures of$8,180,661. This represents an overall reduction of 8.6% over the original adopted 2005 Budget. The General Fund budget is proposed at $3,190,800—a reduction of about 1.5%over the 2005 original adopted budget. It should be noted that general fund expenditures include a transfer out of funds to the Public Safety and Capital Funds for future improvement needs in the amount of $73,755. It should also be noted the City is experiencing a significant reduction of revenue in the area of building permits which is primarily due to reduced construction activity at Guidant and other businesses. We anticipate a reduction of at least $130,000 over the budgeted 2005 revenue estimates. The impact will be on the general fund.