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i iqi !!111 LLU I ME 11, id Date. 4/07/2003 Item o; VIII Department A roval: Manager Approved: Agenda Section: Deports & Recommendations MEN Item D escription: report on State -aid Deductions and recommendation of a Budget Reduction Flan Background With the most recent legislative action, the City stands to lose as much as $717,000 in state -aid for the fiscal' year 2003, and each year in the foreseeable future. If the City is fortunate to receive this state -aid in the future, the amount will likely be sufficient to cover inflationar y effects only, and would not necessarily be available to provide funding for new prograrns. The less in state -aid includes approximately $85,000 in Local Government Aid, and $632,000 in Market value Credit Aid, and represents 100% of the City's non- purpose state aid. These state aids provide funding for tax- supported programs and services including; police, fire, public wolfs, parks, slating center, general administration and finance} as well as others To put the magnitude of the proposed state -aid cuts in perspective; $717,000 is roughly equivalent to: The budget for street maintenance, and snow and ice control combined ❑ The budget for parrs maintenance ❑ The budget for Administration and Finance Departments combined The monies spent responding to fire calls 12-14 full4irne employees' salaries and benefits As is evident, the loss of $717,000 is substantial, and will have an effect on service levels. Given the timeline under which the Legislature operates, we may not learn the final state -aid cut amount until sometime in mid -May. However, it seems almost a certainty that Roseville will lose a substantial amount of state aid for fiscal 2003. The loss in state -aid was expected, but not to the extent of the cuts being proposed. Contingency plans were established during the budget process last year that will help cushion the loss of state -aid for fiscal 2003. To remedy the loss in state -aid, Staff is recommending a dual approach of budget reductions and the use of reserves for fiscal 2003. Additional budget cuts (if needed) and fee increases will be evaluated as part of the 2004 budget process.