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67 <br />2014 Recommended Budget – Use of Cash Reserves <br />68 <br />69 <br />Program Description Amount <br />N/A 2% Employee cost-of-living adjustment $ 165,000 <br />N/A Employee wage step increases 80,000 <br />N/A Employee Healthcare - 3% increase ** 50,000 <br />Police & Fire PERA increase mandate 30,000 <br />Police & Fire Dispatching 65,000 <br />N/A General Inflation 120,000 <br />N/A Reduction from sales tax exemption (30,000) <br />Fire Relief Reduced City Contribution per actuarial study (80,000) <br /> Total $ 400,000 <br />** Based on preliminary information as of July 15, 2013. Recent information suggests that healthcare <br />70 <br />increases will be closer to 1.3% overall, due entirely from new fees mandated under the Affordable <br />71 <br />Care Act. This would reduce the amount needed in the budget to $21,000. <br />72 <br />73 <br />The use of reserves is being considered as a means of maintaining program and service levels in <br />74 <br />conjunction with State-imposed levy limits. These limits were supposed to restrict the City’s levy <br />75 <br />increase for day-to-day operations to no more than 3%. However, the City recently learned that due to <br />76 <br />an unanticipated quirk in the formula being used to calculate our levy limit, the City’s 2014 levy limit <br />77 <br />for operations can increase as much as 15% - substantially higher than originally estimated. <br />78 <br />79 <br />Based on this new information, the Council has the following options: <br />80 <br />81 <br />Increase the levy by an additional $400,000 than originally planned to avoid drawing down any <br />82 <br />reserves. <br />83 <br />Increase the levy by an additional amount to fund a new initiative and/or strengthen the City’s <br />84 <br />capital asset replacement funding. <br />85 <br />Stay the course, and make no further changes. <br />86 <br />87 <br />If the Council decides to stay the course, the City should be prepared to eliminate the use of reserves for <br />88 <br />day-to-day operations in 2015 or 2016 in accordance with City Policy and industry recommended <br />89 <br />practices. <br />90 <br />91 <br />As it currently stands, the Recommended Budget calls for a tax levy increase of $758,895 or 4.4% over <br />92 <br />the current levy. Most of this increase is necessary to pay for the added debt service associated with the <br />93 <br />Parks Renewal Program. The remaining $198,895 (1.4% increase over the current levy) represents the <br />94 <br />amount designated for day-to-day operations. <br />95 <br />96 <br />As currently recommended, the $198,895 in new levy dollars are allocated as follows: <br />97 <br />98 <br />Page 3 of 10 <br /> <br />