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City Manager's 2004 Budget Recommendations IM-P VZ" k � 4 �� $ .o ti .e City Council will not levy back 60 or any significant part of the $700,000 annual loss in state funding. As you know, when the state cut its funding for cities the state also passed a law allowing cities to "levy bace to local taxpayers a portion of the amount of state funds that were cut. Some cities are levying back. I am assuming, however, that the City Council will not use the levy -back option because of your previously ex- pressed desire to reduce City spending and not increase local tax bur - dens, other than the new tax costs for the building bonds and the HRA. The City Council will not develop any s'ni cant new 'it revenue sources, other than approving normal inflationary or other cost -based increases in water and sewer utility rates and in City fees. Some neighboring cities, such as Kittle Canada, are looping seriously at creating a franchise fee on certain utilities that operate in City rights -of -way. New Brighton created such a franchise fee in 2001. other metro cities are increasing their city fees to help make up for their loss in state funds. I am assuming, how - ever, that the Roseville City Council will not create new revenue sources because of your desire to reduce City spending and not place additional burdens oil local utility ratepayers. The City Council will not use City reserves indefinitely to make up for the loss in state Ending. You have authorized the use of $660,000 in City re- serves this year, 2003, to make up for the loss of state funding this year. I am assuming, however, that the city Council will not use City reserves indefinitely because that just delays the inevitable: Sooner or later we must balance our budget in a structural way bar making current operat- ing p ing expenses match current operating revenues. In other words, we can't gust beep spending our savings. III. Principles The principles I applied in developing the following cats are: • The City's budget must be balanced. • We must minimize the effects of budget cuts on the public and especially children. Among many other things, minimiz- ing the effects of budget cuts means: o Cutting city programs and services first that are heav- ily tax subsidized or don't attract widespread public n participation or don't create widespread public impact. Cutting these programs and services would occur be- fore cutting services and programs that, by corn P ari- 3