Item 1A and 1B, 2008 Proposed Budget and Proposed 2008-2012 CIP

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~ ~~HILLS MEMORANDUM DATE: November 19, 2007 AGENDA ITEM: LA, 1.B TO: Mayor and City Council FROM: Sue Iverson, Finance Director ~ SUBJECT: 2008 Proposed Budget and Utility Rates BACKGROUND The council received a draft copy of the 2008 Budget on November 3, 2007. Included in this packet is a bound copy with page numbers for Council review and discussion at the work sessIOn. DISCUSSION Items to note in regard to the budget document: 1. The levy increase in the proposed budget calculates to a 4.95% increase for the City portion of the tax rate, per Council direction. (The memo dated 11/10/07 incorrectly states a 4.99% increase.) The actual levy increase is 6.0%, which is offset by Fiscal Disparities of $233,713, leaving the City portion at $2,602,044 or 4.95%. I have attached the Tax Impact Worksheet that was presented at the Council work session at 5% and the revised 4.9% copy. (The 4.9% page also has an updated "Local Taxable Value" of $13,145,084 which I received frDm Ramsey County on Monday. This increased the cost per homeowner slightly as the amount of Taxable Value decreased slightly.) 2. We have also replaced the City-Wide Summary pages as we noticed some incorrect titles and formulas. Utilitv Rates You will notice that the enterprise funds have excess revenues over expenditures. I met with our financial consultants from Ehlers on Monday to review the Financial Management Plan and to discuss conducting a Utility Rate Study. (This was to be a part of last year's Financial Management Plan, but was post-poned in order to get accurate numbers and accurately assess what our major problems areas were.) I have attached a memo from Ehlers which lists policy issues that need to be discussed. Council feedback/direction is needed regarding these policy issues. A good rate study takes approximately three to four months to complete, so Ehlers recommends that the City implement