8. SR 10-24-1994
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ITEM 8.
MEMORANDUM
TO:
MAYOR & CITY COUNCIL
FROM: PAT KLAERS, CITY ADMI~R
DATE: SEPTEMBER 9, 1994 ~
SUBJECT: BUDGET WORKSESSION "
The City Council must approve a number of motions and resolutions at this
meeting in order for staff to prepare the necessary material for certification
to the County by 9/15/94. Please see the attached memo from the Finance
Director regarding these motions and resolutions.
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The 8/29, 8/30, and 9/6 City Council budget worksession minutes outline how
the City budget has gotten to its current status. In review of my 9/1 memo
and Council decisions on 9/6, and excluding any use of City cash flow monies,
excluding the proposed $10,600 cut in the Council Contingency fund (page 5
of the 9/1 memo), and excluding any increase in Utilities contribution to the
City, then the gap that we "are dealing with between proposed expenditures
and available revenues is $117,500.
Most of the budget balancing techniques that have been used by the Council
include use of equipment reserves in 1994, reducing some reserve and
Council contingency requests, financing items through the 1994 General
Fund Budget, delaying the hiring of new employees in 1995, shifting
expenses to the EDA, raising "growth" related revenues and increasing liquor
store transfers.
It should be noted that no capital outlay items have been cut from the budget
but some capital outlay items have been financed in 1994 to reduce the
budget gap. Also, $15,000 in smaller cuts throughout each individual
department has been accepted by the Council. These cuts will be made
mainly in the supplies, contractual services and conference categories.
I believe it will be necessary for the City to obtain additional revenues, to
make substantial cuts, or to raise additional tax revenues in order to balance
the budget. By raising additional revenues I am specifically referring to an
increased contribution from the Utilities Commission. If the Council is not
united in this Utilities request, then we should be prepared to make
. additional cuts or raise additional tax revenues, or use the cash flow reserve.
P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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Anything short of a united Council request to the appointed Utilities
Commission is not likely to be successful.
Discussion has taken place regarding reducing the surface water
management levy, and, if this does take place, some of this reduced levy
amount could be shifted into the general fund to support City services. At
the end of my September 1, 1994, memo to the Council, I outlined additional
options for the Council to look at in order to balance the budget. These
options may still be viable and should be reviewed by the Council.
One scenario for the $117,500 gap looks like this:
$36,000........ increased Utilities contribution
$25,000........ additional tax revenues
$22,500........ use of cash flow funds
$10,600........ cut in Council contingency
$15,400........ cut in capital outlay/reserves requests
$ 8,000........cut in sealcoating program
.
As the City Council is aware, it can approve a budget that is not balanced by
approving the expenditure level and adding cash flow reserves to the
revenues to ma,tch this amount. If this takes place, then budget adjustments
will be necessary after the September certification date and before the
December Truth in Taxation hearing.
One adjustment staff would like to recommend to the Council relates to the
police VCR camera. On 9/6/94, the Council authorized this purchase through
the use of undesignated equipment reserves. Last year, a VCR police camera
was authorized through the use of the self-insurance reserve fund and it is
suggested that we again use this fund for this camera rather than further
reducing the undesignated equipment reserve fund.
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