6.0. SR 04-23-2001Operating Projections
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Key Financial Strategies
Workshop 2
City of Elk River
Objectives
· Goal is NOT to create a "plan"
· Impossible to accurately forecast 5 to
10 years into future
· Looking for potential opportunities
and challenges
· Focus on forest, not the trees
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Process
· Work from easiest to more complex
· Enterprise
· Special revenue
· General
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Enterprise Funds
· Operating projections not needed at
this point
· Current rate structure appear
adequate
· Strong annual income and balances
· Greater impact from capital
·
~nvestment
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Electric*
· Need for more detailed look at electric
utility
· Power supply issues influence
financial condition
· Beyond scope of this project
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Special Revenue Funds
· Library maintenance · Development fund
· Ice arena · Capital outlay reserve
· Senior citizens special · Insurance reserve
· Government buildings
account
· Park dedication
· Landrill
reserve
· Street improvement
· Landfill construction · Drug forfeiture reserve
debris · Severance pay reserve
· Revolving loan · NSP/RDF reserve
· DTED grant/loan· EDA
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Special Revenue Funds
· Primary financial implications tied to
capital investment
· More attention in next Workshop
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Special Revenue Funds
· Ice Arena
· Self-supporting in 1999
· EDA
· ED activities supported in three sources:
special revenue, HRA, and general fund
· Impact on property taxes
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General Fund
· What expenditures are needed to
support services?
· What revenues are available from
non-tax sources?
· How much property taxes are needed
to close the gap?
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Property Tax Perspective
2001 Tax Levy
Development fund
Capital 3% ~ Other
3% 3°/o
HRA/EDA
5%
Debt
5%
General fund
81%
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Associates
Property Tax Perspective
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
General Fund Revenues
1994 1995 1996 1997 1998 1999
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Understanding Costs
· Growth increases the "demand" for
services
· City must determine how to respond
· Key add factors
· New staff
· New programs
· Mandates
· Inflation of base
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Projecting the Future
· Scenario 1 - Current trend
· General Fund expenditures increased
average 8.9%/year 1994 to 1999
· Scenario 2- Best guess
· Program-by-program
· Examine trends within each element of
General Fund
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Expenditure Trends
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Best Guess Option
· Average increase 2002-2011
· Personal services - 6.4%
· Supplies - 4.6%
· Other services/charges - 4.2%
· Contractual services - 2.3%
· Total- 5.7%
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Potential Needs
· Add street maintenance or police
· ·
position every year
· Additional needs in cable TV,
financial management and
information systems
· Contract or staff custodial services?
· Create in-house engineering dept.?
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Projected Expenditures
16~000~000-
14~000~000-
:1.2~000
:!.0~000~000
8~000~000
6fO00, O00
4,000~000
2~000~000
O-
2002
2004
2006
2008
2010
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Projecting Revenues
· Expenditures only offers incomplete
·
p~cture
· Need revenues for "So What"
· Approach
· Forecast non-tax revenues
· Fill with property taxes
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Projecting Revenues
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Projecting Revenues
· Assumptions for non-tax revenues
· 3% annual increase for Fines
· 1% annual increase for all other
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Projecting Taxes
· Not amount, but rate
· Tax rate depends on property values
· Taxable value determined by: · Growth
· Legislative action
· Appreciation of base
· Use of TIF
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Growth in Tax Base
· Forecast market value and convert to
tax capacity
· Estimated market value 1992-2001
· Average annual increase - 10.59%
· Low - 4.32% (1995)
· High - 24.06% (1996)
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Tax Base Projections
· 10-year average
· 9%
· 7%
· Growth with slow down after 2005
· 3% inflation
· 200 single/20 multi/10 CI to 2005
[] 100 single/10 multi/5 CI after
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Projected Tax Base
40~000~000-
35~000~000
30~000~000
25~000~000
20~000~000'
15~000~000-
~0~000~000
5~000~000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Current Trend
50.00%
Projected General Fund Tax Rate
45.00%
40.00%
35.00%,
30.00%
25.00%
20.00%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2001 - 26.3%
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Best Guess
34.00%
Projected General Fund Tax Rate
32.000/0.
30.00%
28.00O/o
26.00%
2001- 26.3%
24.00%
22.00%-
20.00%
2002 2003 2004 2005 2006 2007 2008 2009 201.0 201.1.
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Planning Implications
· Difficult to maintain historic
expenditure trend without higher tax
rate
· Growth in tax base key to future
financial condition
· Tax impact created by both tax rate
and property appreciation
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Planning Implications
° Continue to seek additional non-tax
revenue
° Continued long-term vision is
essential
· Limits tax revenue available for
capital improvements
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