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~BQ~~~ ~~ la~~~/~7 MEMORANDUM TO: MEMBERS OF THE ROSEVILLE CITY COUNCIL FROM: AMY IHLAN SUBJECT: SUGGESTIONS FOR REDUCING PROPOSED TAX LEVY INCREASE DATE: DECEMBER 7, 2007 If the currently proposed city and HRA budgets and tax levies are approved, the council will increase Roseville's property taxes by more than 12%. Staff's budget assumptions include an inflation rate between 3.5% and 4.5%. The most, recent U.S. Department of Labor Consumer Price Index report (October 2007) shows a 3.5% increase since October 2006. Using the Labor Department's statistics, Roseville's proposed tax levy increase is over 3 times the prevailing rate of inflation. I believe that such a large tax increase is not justifiable, especially given the many economic difficulties and uncertainties our taxpayers are facing right now. I have the following suggestions for reducing the budget and overall city property tax increase from approximately 12.1% to 6.9%, and am prepared to raise these as motions at our next meeting: 1. Pay for capital replacements and information systems needs out of reserve funds. Use of reserves for capital and equipment is appropriate. If these expenditures are important enough to justify raising property taxes, they are important enough to justify drawing on a small fraction of our reserve funds. But if they are not that important, we should defer spending on them - or in the case of the information systems request, defer them until our IT programs generate sufficient funds to support them. Using reserves or deferring these expenditures would reduce the tax levy increase by $250,000, or approximately 2.5%. 2. Remove the $80,000 contingency/Imagine Roseville 2025 fund. This would reduce the tax levy increase by approximately .8% If the council is going to raise property taxes to implement Roseville 2025 initiatives, we need to make policy judgments about spending priorities and specifically include any new programs in future budgets. We didn't do that this year, and there is no basis for the council to tax residents for unspecified visioning initiatives in 2008. Staffhas indicated in response to my questions that the $100,0001evy increase for "supplies, contract maintenance, etc." is intended to cover cost increases in supplies, maintenance, and professional services contracts. There is also a separate $50,000 increase for motor fuel and energy costs. These tax increases should provide a sufficient contingency fund for our general program needs. 3. Remove the additional $25,000 for general facility repairs and pathways. This would reduce the tax levy increase by approximately .25%. If urgent repairs are needed, I