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�4�� �� �� To: City Council Depa�-trr��t�s From: Neal Beets Date: October 5,2005 Re: 5%Levy Scenarios INTRODUCTION Date: �.0/�.0105 Item: 10. Budget Discussion and Direction As directed by the Council at your September 26 Council Meeting, I have attached a spreadsheet that shows are a variety of ways to achieve a balanced City budget with a 5% tax levy increase and no reduction in City staff. The four options shown on the spreadsheet are not the only ways to balance the budget. The spreadsheet is organized menu-style so you could mix-and-match budget items from different columns depending on your preferences. Now, as I have said all along since July, I don't recommend any of these options. Spending reserves again for 2006, as we have done three of the last four years, is not in my opinion a wise thing to do. And delaying to a future budget year the purchase of capital items scheduled to be replaced in 2006 is not a sustainable or a good budget practice. These items will have to be replaced eventually; which simply makes the 2007 or some future budget that much more difficult for you to balance when you do finally authorize these items to be replaced. With that Introduction, I will first describe how these 5% budget scenarios work in words. Then I'11 present the spreadsheet that portrays the numbers. 5% LEUY BUDGET SCENARIOS ff you want to balance the budget with a 5% levy increase, and you don't want to cut any city staff, you could (a) spend reserves, (b) cut non-personnel operating expenses in tax-supported areas, (c) cut capital items funded by tax levy dollars, (d) increase no�- tax revenues, or (d) some combination of the above. You will see all these options in the attached spreadsheet except for (d). You will remember I proposed several non-tax revenue increases last year to achieve my recommended 5%levy increase last year, and the Council did not adopt any of them. 1