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City of Roseville — 2010 Budget Letter of Transmittal December 21, 2009 To the Mayor and City Council, Enclosed is the 2010 City Budget as prepared by City Staff, in accordance with City Council direction. The 2010 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. For 2010, the City initiated a new outcome -based budgeting approach that was designed to better equate desired outcomes with spending decisions. This process was also designed to give greater transparency on where financial resources were allocated. In addition, it ensured through a prioritization process, that the programs and services that mattered the most to the community received sufficient funding. This new process included multiple community meetings as well as several public hearings for the purposes of soliciting input and to gauge citizen reaction to proposed service offerings. The level of public participation during the budgeting process was significantly more than in previous years — a specific objective outlined in the City's Imagine Roseville 2025 JR2025) long -term visioning process. For 2010, the City projects a significant decline in state aid monies, interest earnings, and other revenues that support the City's Police, Fire, Public Works, and Parks & Recreation functions. In addition, the City's vehicle replacement program lacked the appropriate resources to replace vehicles at the optimal time. These financial realities necessitated a larger -than usual increase in the property tax levy. Despite this increase, Roseville residents still pay less for city services than most peer cities, and as a percentage of household income, residents pay less than they did in 2002. The City expects to face a number of financial challenges for 2010 and beyond. 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 continue implementing recommendations set forth in the Imagine Roseville 2025 process ❑ Responding to reductions in state -aid monies With the exception of the challenge pertaining to the IR2025 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 $550,000 annually for fuel and energy costs alone. And although these costs are below all time levels, the City recognizes the need to remain committed to reducing overall consumption in 2010 and beyond. 1