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City of Roseville — 2006 Budget Discussion Items From 2002 -2006, overall funding sources for the City's governmental fund operations remained fairly stable with a few exceptions. The City's tax levy increased substantially in 2002, to offset the loss in homestead credit state -aid. This was an intended effect resulting from the State Legislature's decision to remove the homestead credit reimbursement to help finance the State's takeover of the general education (per pupil) funding. In 2004, the tax levy was increased to accommodate new debt service on voter - approved bonds issued the previous year. The City's reliance on property taxes has increased in recent years as a result of lost state -aid and stagnant non -tax revenues. Beyond 2006, it is expected that the City's tax levy will need to increase at levels that are slightly higher than expected inflation. This will be necessary to offset new obligations that will come on -line in the future and to replace non - recurring revenues that were used to provide for 2006 operations. After several years of decline, special assessments are expected to level off in 2006. Beginning in the mid 80's, the City embarked on a comprehensive street replacement program which resulted in a substantial amount of new assessment activity. These assessments have largely been paid off resulting in lower assessment revenues for 2006 and beyond. Over the next 10 years, it is anticipated that assessment revenue will remain relatively unchanged. Interest earnings are also expected to remain fairly unchanged from '04 actual levels. While the economy continues to be relatively strong in many regards, long -term interest rates remain far below what was realized in previous years. However, most economic forecasts suggest that while long -term interest rates have remained low, they are not expected to decline further. As a result, the City does not expect significant changes in investment income for 2006. The City does expect fairly strong increases in licenses and permit revenues in '06 and beyond. Building permit revenue is expected to increase as several major redevelopment projects get underway. These projects are expected to occur at a fairly even pace over the next five years. In addition, the City's License Center operation continues to see strong growth in multiple service areas including passports and auto dealer licensing. From 2002 -2006, the City continued to emphasize its core functions of public safety and public works. In 2006, a substantial investment will be made in police and fire information and communication systems including a new records management system and conversion to the 800mhz radio system. Higher dispatching costs are also expected to be realized in 2006. The public works area is realizing higher operating costs due to higher energy costs and service input costs such as fuel. In addition, added pedestrian safety measures will require additional funds in 2006. It is expected that these higher costs will continue in future budget years in order to maintain service levels. The City's special purpose operations account for a variety of stand -alone functions including the City's License Center and Information Technology Support areas. As noted above, the License Center continues to experience steady growth. Likewise, the IT area has seen substantial growth in recent years as the City has not only emphasized greater investment in IT for its own needs, but it also provides IT support services for 16 area municipalities and other governmental agencies. The City expects these IT partnerships to continue growing in future budget years. 16