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State's projected budget deficit of$3 billion, it is almost a certainty that the City will lose a portion or all of its LGA. In preparing the 2003 Proposed Budget, Staff has taken a conservative approach and set aside additional levy dollars to replace the anticipated loss of state aid. This is the same approach that was used in setting the 2002 Budget when it became known that the City would lose HACA state aid. The same holds true with respect to the loss in federal aid to pay for the cost of hiring additional police officers. Beginning in 2003, two (2) officers hired in 1999 will no longer be funded under the "Clinton COPS" funding program. This particular funding was for a 3-year period, and has lapsed. This results in the need to fund these positions out of the General Fund (i.e. tax levy). The tax levy need is approximately $100,000. In this instance, the City made a commitment three years ago to provide the necessary funding in 2003 to keep these officers on Staff In total, the loss of State and Federal Aid results in a tax levy impact of $140,000 in 2003. Levy Impact Due to Other Factors There are a number of factors external to the organization that add pressures against the tax levy that result from previous commitments made by the City. This includes a reliance on the use of outside legal services ($54,000 increase over 2002), and providing for an adequate pension for paid-on-call firefighters ($120,000 increase). Clearly these functions are part of the City's success story. However, they can, and do present budget challenges that are difficult to plan for, and can exceed "normal" cost increases. 6