Minutes 03/29/2004 - Laserfiche WebLink

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March 29, 2004 These increases in the cost of government are necessitating the proposed tax rate increases. While the majority of the rate increases will go to Schools, the remaining amount will go to fulfill the City's commitment to its employees, to retirees by ensuring the solvency of the retirement funds, and to the healthcare funds. ACHIEVING THE FINANCIAL PRIORITIES In the City Council's November 2003 Retreat, a three-year financial strategy was outlined that would lay a financial foundation to carry the City forward in its renaissance. In this, the first of the three years, I am excited to say that we have implemented or are in the process of implementing all the strategies. These strategies are essential to the City's future financial stability and success. They cover a wide range of topics which are addressed in various ways in the proposed budget. I plan to cover the status of these financial priorities in more detail in a Public Work Session. GENERALFUND EXPENDITURES The total budgeted General Fund expenditures grew by 4.3% over the FY 04 budget with mid-year amendments. This is down from the five-year average annual growth of 7.1%. The growth in expenditures for FY 05 is directly attributable to the following areas. · Growth in the Schools transfer. The Schools budget is proposed to increase by $4 million. · Growth in the cost of retirement. The growth in retirement costs is $5.1 million. · Growth in the cost of life insurance. The growth in life insurance costs is $797,000 over the previous year. · Growth in the cost of healthcare. With a total growth of 26%, the cost of healthcare grew by more than $2.2 million. · Growth in the cost of internal services. To address cash flow deficits in the internal service funds, funding has been increased by $6.6 million. Taking these factors into account and without any proposed increases in operational costs, an $18.7 million increase in expenditures was looming. The growth in revenue clearly was not going to keep pace with the growth in expenditures. Working with the department directors, we were able to employ several strategies to further reduce expenditures. · Reduced the number of positions. Positions were evaluated to determine their necessity to the organization, and many vacant positions were eliminated. Reduced discretionary spending. Every line item was evaluated to determine the appropriate level of funding. We have reduced discretionary spending accounts for City departments by 7.5 percent over last year. Reduced cash-funded equipment replacement through the use of master lease purchases. Through the use of a master lease, we were able to reduce the cost of equipment replacement. Given the current lower interest rates, the cost of using a master lease is minimal and is less than the rate of inflation. This strategy will replenish cash in those internal services funds where deficits exist. Reduced the amount of debt service. The 2003 bond refunding reduced overall debt service in FY 04 and again in FY 05. Taking advantage of interest rates that are at historic lows, the City refunded $104 million of existing general obligation bond debt, with savings of $1.5 million for FY 05. With all of these reductions, we were still left with a budget gap of $6.4 million. In order to be able to continue to provide current levels of service and to be able to provide