05-21-07 Item 2B, 2008 Prelim Budget Discussion

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~ /],\~HILLS MEMORANDUM DATE: May 16, 2007 Agenda Item 2.B. TO: Honorable Mayor and City Council Sue Iverson, Finance Director .~ Schawn Johnson, Assistant City Administrator.sq.:) FROM: SUBJECT: 2008 Preliminary Budget Discussion BACKGROUND: The City staff is in the process of developing a Preliminary 2008 Budget. As we progress forward and take the necessary steps, staff needs general direction and guidance from the Council with regards to changes for the coming year. Once again, there are no levy limits for 2008. The City is not under any legislative restrictions with regards to establishing a levy. As you may recall, there were no levy limits for 2005, 2006, and 2007. A number of Ramsey County cities opted for double digit increases. A number of cities took advantage of the "no levy limit" to make up for the loss of LGA and to undertake new projects. The City Council was prudent and limited the levy increase to 4% from prior years as they established levies for 2005,2006, and 2007. In 2006 during the legislative session, there was discussion about "Turbo Tax" that would have restricted the cities from increasing the levy amount from prior year. If this was to become law, cities would not have been able to increase the levy, unless a vote was taken. Fortunately, this discussion did not re-appear this year. DISCUSSION: Preliminarily, staff has identified a number of factors that will influence the 2008 Budget. Some are identified as follows: · Tax Levy - what is the Council's comfort level? Last year was a 6% increase. Al % levy increase translates to approximately $25,000. Council may wish to consider a higher percent increase from prior years so that the excess amount can be contributed to Parks, Public Safety Capital, or Utility Funds.