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Budget Issues <br /> <br />Identifying an ongoing funding source for the City’s expenditures in the Permanent <br />Improvement Revolving (PIR) fund is very important. The City will be using in excess of <br />$1.5 million of PIR funds to pay for its share of the streets in the 2015 PMP projects. <br /> <br />Up until recently, the City annually transferred $200,000 from the General Fund to the <br />PIR Fund. These transfers have stopped as money was needed in the General Fund for <br />street and trail maintenance. <br /> <br />The City fund balance policy states that funds in excess of 50% of the cash-flow <br />requirement is to be transferred into the PIR at the end of the year. Unfortunately, there <br />were zero funds transferred into the PIR fund at the end of 2014. At the end of 2015 it is <br />also going to be difficult to add any money to the PIR fund as the $58,305 of cash-flow <br />reserves that were used to balance the budget will need to be repaid first. This use of <br />reserves to balance the operating budget is a concern when also trying to transfer funds at <br />year end into the PIR. <br /> <br />Budget Numbers <br /> <br />The attached draft budget proposal shows a deficit of $200,326. Please see the enclosed <br />budget memo for details. <br /> <br />Some expenditures in the draft 2016 budget for the City Council to consider include: <br /> <br /> $ 54,039 increase for Public Safety <br /> 30,000 increase in transfer to the EDA <br /> 39,319 cost for a 3% COLA and planned step increases for employees <br /> (this is the General Fund total; the City wide total is $ 71,844) <br /> 58,305 elimination of the use of cash-flow reserves to balance the budget <br /> 100,000 establish a transfer to the PIR fund <br />____________ <br />$281,663 <br /> <br />The above total does not include any necessary increases for supplies, contracts, utilities <br />and building maintenance, professional services, street and trails maintenance, etc. <br /> <br />A 3% tax levy increase will generate $102,000. If the Council plans to stay with a 3% tax <br />levy increase there will not be sufficient funds to eliminate the use of reserves and to <br />establish a transfer to the PIR fund. Approximately 79% of the City’s General Fund <br />revenues come from property taxes. <br /> <br />The general rule is that there is never a good time to raise taxes. However, 2016 in Arden <br />Hills may be the “exception to the rule” as TIF #2 Round Lake will be coming onto the <br />tax rolls. <br />