2012-11-27_PWETC_AgendaPacket - Laserfiche WebLink

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47 The 2013 City Manager Recommended Budget for the tax - supported programs is $21,832,042, an increase 48 of $2,363,482 or 12.1 %. The majority of this increase ($1,650,000) is for added debt payments related to 49 the 2011 and 2012 Bonds issued for the new fire station and Park Renewal Program. 50 51 The City Manager Recommended Budget for the non tax - supported programs is $23,653,968, an increase 52 of $1,621,774 or 7.4 %. The increase is due to added cost of wholesale water purchase from the City of St. 53 Paul and wastewater treatment charges from the Met Council, as well as general inflationary increases. It 54 also includes an additional staff position for the License Center and Information Technology divisions. 55 Both of these positions are funded by non -tax revenue sources. 56 57 2013 Preliminary Capital Improvement Plan (CIP) Budget 58 Under separate action, the City Council will be asked to formally accept the reports and recommendations 5s submitted by the Capital Improvement Plan (CIP) Subcommittee at the November 19, 2012 City Council 60 meeting. In accordance with those recommendations, the 2013 Preliminary Budget includes an 61 appropriation in the budget for the 2013 scheduled items listed in the CIP. 62 63 A listing of the 2013 CIP scheduled for purchase is included in Attachment A. It should be noted, that the 64 items listed in the CIP will not equate to the funding amount included in the annual Budget. The annual 65 Budget represents the amount set aside each and every year to provide for capital replacements over the 66 long- grin. hi contrast, the CIP represents that actual schedule of capital purchases. 67 68 Using Cash Reserves es On several previous occasions there has been discussion on the merits of using cash reserves to provide for 70 capital replacements or other purposes. The memo referenced above and included in the Council's 9/10/12 71 packet addresses the role and relationships these reserves have with the City's long -term financial success. 72 73 There has also been discussion about the merits of using operational savings from the 2012 fiscal year and 74 applying it to 2013 thereby allowing for a reduction in the 2013 Preliminary Tax Levy. However, this is 75 problematic for a couple of reasons. First, while the accuracy of projected operational savings improves as 76 the City nears its fiscal year -end, unforeseen events can take place in the final weeks and months that can 77 erode or significantly diminish those projections. This may include snow or ice - related events that require 78 additional supplies, materials, and overtime. Or higher -than- expected police and fire calls which also 79 require additional supplies and personnel - related costs. It also might include reductions from the City's 8o property tax collections due to delinquencies or valuation appeals which aren't fully known until January of 81 the following year. 82 83 A second consideration stems from the commitment the City Council made when it instituted a 2 -year 84 budget process. At the time, it was assumed that any operational savings in year 1 (2012) would be 85 available for year 2 (2013). This allowed City Staff the added flexibility to respond to unforeseen 86 circumstances and take advantage of pricing discounts and other opportunities by moving a portion of the 87 money from one year to the next. In some cases, departments have already taken measures to create 88 operational savings in 2012 with the knowledge that these monies will be needed to offset higher -than- 89 expected increases in 2013. so 91 The 2013 City Manager Recommended Budget reflected this reality, by removing nearly $100,000 in 92 additional funding requests that had been submitted by Department Heads — in exchange for the ability to 93 retain and use 2012 operational savings. 94 A summary of the projected cash reserves for December 31, 2012 is included in Attachment B. Page 3 of 4