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. . . ~ ~HILLS MEMORANDUM DATE: September IS, 2005 Agenda Item 2.B TO: Honorable Mayor and City Council FROM: Murtuza Siddiqui, Finance Director/Treasurer "',s SUBJECT: Preliminary 2006 Budget Discussion - Continued BACKGROUND: At the June 20,2005 and August 15,2005 Work Sessions, the Council provided staff with general guidelines to initiate work on a Preliminary 2006 Budget. At these meetings the Council provided staff with general guidelines and based on these guidelines, a preliminary budget has been prepared for discussion. On September 12, 2005, the Council adopted a preliminary Tax Levy in the amount of $2,523,737. DISCUSSION: The attached 2006 Preliminary Budget has projected expenditures of $7,946,742. This represents an overall reduction of 11 % over the adopted 2005 Budget. The General Fund budget is proposed at $3,190,800 - a reduction of about 1.5% over the 2005 adopted budget. It should be noted that general fund expenditures inelude a transfer out of funds to the Public Safety and Capital Funds for future improvement needs in the amount of$92,880. 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 anticipated a reduction of at least $125,000 over the budgeted 2005 revenue estimates. The impact will be on the general fund, The following are the key highlights of the Preliminary 2006 Budget: · Tax Levy- a 4% increase was adopted at the September 12, 2005 Council meeting. This translated into a $97,067 increase from 2005. The City certified this preliminary levy to Ramsey County on September 14, 2005. A final levy is established and certified in December. Please keep in mind that onee a preliminary levy is established, the amount ean be reduced, but it cannot be increased.