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Letter of Transmittal Page 5 The bulk of the new technology is related to telecommunications (communications and computers). The City currently has a commu- nications fund that is used to purchase new telecommunications technology. It is proposed that this fund be used to assist the City in taking advantage of the telecommunications technology to enable the City to continue to provide high quality, cost effective services. BUDGET OVERVIEW The intent of this overview is to provide a summary of the 1990 Budget, noting significant changes from the 1989 Budget. The overview addresses four major areas: Tax Capacity, Levy and Tax Capacity Rates, Revenues, and Expenditures. � Tax Capacitv Tax legislation passed in 1988 initiated the use of the term "Tax Capacity" in place of "Assessed Valuation" as a measure of property value as a base for property taxation. The City's Gross Tax Capacity (GTC) for 1989 was $43,183,748. The 1990 Gross Tax Capacity is approximately $45,000,000, an increase of 4.2 percent over 1989. Levies and Tax Capacitv Rates The total 1990 Budget is $18,231,928. This is an increase of $1,687,714, or approximately a 10.20 percent increase over 1989. Tax levy requirements to finance this budget are $6,306,793, for ' an increase of 22.4 percent from the 1989 levy amount. Based on the Gross Tax Capacity and the levy requirements, the Tax Capacity Rate for 1990 will be 14.015 percent. This is a 27.25 percent increase over the 1989 rate o£ 11.014. These levy and Tax Capacity Rate increases are due to a change in State law that shifted nearly $1,300,000 of State aid revenue from the City to the school districts. Prior to the State aid shift, the tax levy required to finance the 1990 Budget had decreased by 4.12 percent from the 1989 levy amount. When the State aid was shifted to the ' school districts, th2 only source of ravenue available to replace ' the State aid was property tax revenue. The City then had two options: reduce the budget by $1,300,000 by making severe cuts in programs and services, or increase the tax levy to replace the lost State aid revenue. The premise of the State aid revenue shift was that it would have a zero impact on the total property tax bill (city, school, and county) because the school districts would reduce their tax levies by the amount of the State aid shift just as the cities would increase their tax levies by the amount of the State aid revenue shift. Based on this premise, the City chose the tax levy increase option. The result is that the City's portion of property taxes on homes in Roseville will increase by 27.25 percent. This translates to an increase of $54.80 on an average valued home ($82,000), and a$68.28 increase on a home valued at $100,000. As indicated above, the increase in the City's portion of the property tax bill shouid be offset by a decrease in the school district's portion of the property tax bill. AS