2008_0616_packet - Laserfiche WebLink

Home

Budget Impacts — Major Cost Items The following major cost items are expected to impact the City's 2009 Budget: ❖ Based on recent contract settlements with peer cities, the City is forecasting a 3.5% cost -of- living adjustment for City employees. In addition, most City employees are eligible to receive pay -step increases under the City's Compensation Plan which will also increase City costs. The total financial impact on the 2009 Budget is estimated to be approximately $030,000. ❖ Based on current healthcare and utilization trends, the City is forecasting a 30% increase in healthcare premiums. Under current practice, the City's share of those premiums would be one -half or 15% with the employee bearing the other half. The total financial impact on the 2009 Budget is estimated to be approximately $250,000. ❖ Motor fuel costs are expected to increase by approximately $55,000 citywide or 40 %. ❖ Energy - related costs (gas and electric) are expected to increase by $70,000 or 10 %. ••• Under legislation approved in prior years, the City's share of PERA will increase in 2009 from 0.50% to 0.75% of employee salaries for non - police and fire personnel and from 12.9% to 14.1 % for police and fire personnel. The total financial impact on the 2009 Budget will be approximately $75,000. The major cost items detailed above amount to $1,110,000 of which approximately $550,000 is accounted for in property -tax supported programs. This does not include the impacts on other operating costs due to general inflation such as supplies and materials, contracted services, insurance, etc. Nor does it include any additional monies for the City's capital replacement programs. Property Tax Impact If the City determined to put forth a budget that simply maintains the status quo, it is estimated that the property tax levy would need to increase by $500,000 or 0 %. Absent an increase of this size, the City would either need to identify new non - property tax revenues (such as a street light or transportation utility) , spend reserves, or reduce service levels. Because of stagnant housing values (see above) , approximately 70% of the added tax burden would fall on commercial /retail property owners. POLICY OBJECTIVE A discussion on the Council's goals and priorities is identfied on the 2009 Budget Calendar as outlined in Resolution #10588, dated January 7, 2005. FINANCIAL IMPACTS Not applicable STAFF RECOMMENDATION Staff recommends that the Council formally identify which goals and priorities should receive funding priority for 2009. Page 2 of 5