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City of Roseville — 2008 Budget Letter of Transmittal December 17, 2007 To the Mayor and City Council, Enclosed is the 2008 City Budget as prepared by City Staff, in accordance with City Council actions. The 2008 Budget culminates nearly a year's worth of planning, evaluation, and input from the City Council, advisory commissions, and citizens. Great effort has been taken to ensure that the City's core services are funded in a manner that preserves the greatest value to the community. In addition, steps have been taken to account for the changing trends and impacts that will affect both next year's and future year's budgets. To the greatest extent possible, new technologies and efficiencies have been incorporated into our service delivery process. However, several challenges remain that will have a significant impact on the 2008 Budget. They include: ❑ Rising fuel and energy costs ❑ Maintaining a competitive employee compensation and benefit package ❑ Strengthening the City's asset replacement funding mechanisms ❑ Strengthening cash reserves ❑ Positioning the City to implement recommendations set forth in the Imagine Roseville 2025 process With the exception of the challenge pertaining to the Imagine Roseville 2025 process, all of these impacts have been on -going for the past several years. Each of these impacts is addressed in greater detail below. Many of the City's largest service inputs - such as fuel and energy related costs are outpacing general inflation. For example, the City spends over $500,000 annually for fuel and energy costs alone. Also, in an effort to attract and retain high - performing employees, the City makes great effort to ensure that the City's compensation and benefit package is commensurate with peer communities. To that end, the City has budgeted for an employee cost -of- living adjustment (COLA) of 3.5 %. Personnel - related costs represent the single highest cost input into the City's service delivery process. The City's asset replacement funding mechanisms, while generally strong, do not have sufficient revenue streams to replace the City's park system assets or city facilities at the optimal time. Added funding has been included in the 2008 Budget to strengthen our ability to replace assets at the end of their useful lives. Additional emphasis will be needed in 2009 and beyond. The City's cash reserves, while strong overall, are somewhat below target levels in a few of the City's key operating funds. In 2007, the City Council affirmed recommended reserve levels and took initial steps to strengthen selected funds including the establishment of a dedicated tax levy for this purpose.