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<br />. CITY OF 1lRDEN HILLS <br /> MEKllANOOM <br /> DATE : August 18, 1992 <br /> TO: Mayor, city C01mcil MaDbers and Staff <br /> FRCH@) Terry Post, city Accountant <br /> SUBJD::T: 1993 Budget Process overview <br /> As the 1993 Budget process begins, the following factors should be kept in <br /> mind : <br /> 1- Sicmificant Capital Item <br /> Previous direction from Council to staff was to limit the General <br /> Fund 1993 proposed J::udget expenditures to a less than 5% increase <br /> over the 1992 approved J::udget. '!he proposed 1993 J::udget <br /> distributed for this meeting does not a=ornplish this objective. <br /> '!he projected 8.6% increase includes a $100,000 Capital Budget <br /> item for a new street SWeeper. If this Capital item were treated <br /> as a discretionary "overlay" item and excluded from the 1993 <br />. Baseline Proposed Budget, the rate of increase would be <br /> approx:iJnately 3.5% - well within Council guidelines. <br /> 2. External Factors Affectim the Process <br /> a. Beginning 6/1/92, the City is liable for Minnesota Sales Tax <br /> at the rate of 6.5% on most non-labor, non-construction <br /> project, purchases. '!he impact is most severe on the Capital <br /> Budget items. <br /> b. DaW Limitations have been removed by 1992 Legislative action. <br /> c. It is anticipated that no dramatic changes will oa::ur in the <br /> Consumer Price Index (CP!) from 1992 to 1993. A 3.0% range <br /> movement in the 1993 Pay Plan appears reasonable. <br /> d. As the Legislature has continued to "hly down" the Tax <br /> Capacity Percentages (i.e. the maximum residential tax <br /> capacity moving from 3% to 2 1/2% to 2% in 1993) the City's <br /> General FUnd is IlUlch oore deperrlent upon =llection of HACA <br /> aid. <br /> TRP:rk <br />. <br />