December 2011 Gem Lake Newsletter

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Gem Lake News Page 2 of 6 Starting at the beginning, it is important to note what is included in each budget grouping. The total expenditure budget comprises not only the expenses to run the day-to-day operations of the city, but also the Enterprise Fund, which covers the expenses of the sewer; and the Debt Service Fund, which services outstanding bonds. These bonds cover two roadway projects and the cost of Heritage Hall construction. The total budget of $623,942 is comprised of a $419,387 General Fund Budget, a $151,790 Debt Service Budget and a $52,765 Enterprise Fund Budget. The General Fund Budget tends to get most of the copy since it takes up the bulk of the revenues and comprises the area where the most discretion can be exercised. There are four basic categories within the General Fund Budget. These are General Government, Public Safety, Public Works and Transfers. The General Government portion of the pie is $184,922, a decrease of 10.84% over 2011. This would make up things like city clerk, city council, legal and building expenses. The category of Public Safety is made up of police, fire and animal control costs. This portion of the General Fund budget will increase 6.27% over 2011 to $120,800, primarily due to increases in contract costs. The Public Works budget will decrease 18.27% to $53,655. This budget covers things like street repairs and maintenance. The ability to decrease this budget category has resulted from various repairs and maintenance being made in the past few years to curbs, storm sewers and streets. The last category within the General Fund Budget is Transfers of $60,000 to other budget categories. The largest revenue source for the general fund is property taxes. These revenues are projected to decrease 17.1% in 2012, partly because the City of Gem Lake is striving to keep the general fund tax levy as low as possible, and partly due to declining real estate values. The general fund tax lev y will be $222,172. When combined with the debt service levy 2012 City Budget Approved (continued from page 1) of $51,300, the total property tax levy divided up among residents will be $273,472. Like most cities, Gem Lake lost 100% of the Local Government Aid it received. Also, the Market Value Homestead Credit program has been eliminated in its old form. Both changes resulted from budget chaos on the state level in 2011.The city has worked hard to cushion residents from the impact of these losses by keeping its budget as modest as possible, according to Gem Lake Mayor Bob Uzpen, particularly in light of the fact that the city's tax capacity (the total value of real estate) has decreased 7.22% over the past year. Even with conservative budgeting, it is possible that residents will see an increase in their total tax bill, due to increases in county and school budgets and the elimination of the Market Value Homestead Credit program in its old form. There was a handout sent with the initial tax statements from the county, which is designed to explain some very complicated changes and their potential impacts on home owners. Two important facts to keep in mind according to the mayor: 1) The city's tax rate has gone down about a percentage to 26.21%; and 2) the city gets only 21.68% of the property taxes collected. The remainder goes to Ramsey County (50.49%), the School District (21.54%) and other agencies, such as the local watershed board (6.29%).