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** Budget and Tax Levy Information Provided at the 12/2/02 Meeting ** 2003 Proposed Budget The proposed 2003 Budget is $34,802,395, a decrease of $2,787,079 or 7.4%. The decrease has resulted primarily due to a reduction in the City's debt service costs, and tax increment pay-as- you-go payments. The following table provides a summary of the proposed budget by major expense category. Personal Services $ 10,690,612 $ 112184,405 $4939793 4.6% Su lies&Materials 9669218 993,755 279537 2.9% Other Services&Char es 129005,734 12,691,025 5$5,291 5.7% Capital Oud 49229,290 511779,500 9489210 22.4% Debt Service 496979620 2,120,240 2,5771380) (54.9)% TIF Pa -as- ou-Oo 59000,000 2,635,470 2,3649530 47.3 % Total $37,589,474 $ 34,802,395 $__(29787,9079) (7.4) Personal Services includes the wage, benefit, and insurance costs of employees. The proposed budget for this item has increased due to increases in wage adjustments and insurance premiums. In an effort to attract and retained highly qualified employees, the City's Compensation Plan (and budget) provides for a cost of living adjustment (COLA) of 3%. In addition, health and dental insurance premiums charged to the City is expected to increase 12%. Supplies and Materials include office supplies, motor fuel and vehicle supplies, clothing and protective gear, street repair materials, and salt/sand purchases. A small increase is estimated for 2003 to account for general inflation effects Other Services and Charges include professional services, contractual maintenance and repair, utilities, memberships, inter-fund charges, and training and conferences. An increase is expected due to higher maintenance costs, a 2% increase in the purchase of bulk water, and a 5% increase in wastewater treatment costs. Capital Outlay includes both new and scheduled replacement purchases of vehicles and equipment, water meters, and infrastructure improvements. A substantial increase is budgeted due to the capital replacements of utility mains, and to implement the stormwater Phase II Plan. Debt Service includes the principal and interest paid on bonds used to finance infrastructure improvement projects. The decrease in debt service costs will result due to the defeasance of bond issues in 2001 and 2002. TIF Pay-as-you-Go refers to tax increment paid to developers as specified in Tax Increment Financing (TIF) agreements between the City and various developers. The decrease in TIF pay- as-you-go will result due to the termination of various developer agreements for which all city obligations have been met. 7