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City of Roseville — 2009 Budget Letter of Transmittal December 15, 2008 To the Mayor and City Council, Enclosed is the 2009 City Budget as prepared by City Staff, in accordance with City Council actions. The 2009 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 2009 Budget. They include: ❑ Volatility in fuel and energy costs ❑ Maintaining a competitive employee compensation and benefit package ❑ Strengthening the City's asset replacement funding mechanisms ❑ Positioning the City to implement recommendations set forth in the Imagine Roseville 2025 process ❑ Responding to State - imposed Levy Limits and potential reductions in state -aid With the exception of the challenge pertaining to the Imagine Roseville 2025 process, all of these impacts have been generally 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 remain volatile and are outpacing general inflation. The City spends over $500,000 annually for fuel and energy costs alone. And although these costs have dropped in the past 3 months, the City recognizes the need to remain committed to reducing overall consumption in 2009 and beyond. 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 2.9 %. Personnel- related costs represent the single highest cost input into the City's service delivery process. The City's asset replacement funding mechanisms, while strong in some areas, do not have sufficient revenue streams to replace the City's vehicles, park system assets or city facilities at the optimal time. The City was limited in its ability to improve this situation in 2009; therefore additional emphasis on these areas will be needed in 2010 and beyond. The City's cash reserves, while strong overall, are below target levels in a few of the City's key operating funds. Like the City's asset replacement mechanisms, additional emphasis on improving key reserve levels will be needed in 2010 and beyond. 1