06-14-10 CC WS AgPCITY OF SHOREWOOD
CITY COUNCIL WORK SESSION
MONDAY, ,NNE 14, 2010
AGENDA
5755 COUNTRY CLUB ROAD
CITY HALL
6:00 P.M.
Attachments
1. CONVENE CITY COUNCIL WORK SESSION
A. Roll Call
B. Review Agenda
2. 2011 BUDGET
Mayor Liz&
Bailey_
Turgeon
Woodruff_
Zerby _
Administrator's
Memo
3. ADJOURN
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f?ATE- June ", 2010
SLJBJEC T 2011 Budget Work Session
The City is under levy limits for the 2011 budget. The only change to the law was the inclusion
of a minimum to avoid the possibility of a negative levy impact that would require cities and
counties to lower their levy. The limit is still based on the IPD and cannot be lower than 0 or
higher than 3.9% of the previous year's allowable levy.
In the attachment, I provide general information on the estimated needs for 2011 to cover
additional salaries and benefits for staff and increases to the fire and police operations. To meet
these estimated obligations, the levy needs to increase a minimum of about 1.2% or about
$66,000.
1 also provide illustrations on the impact of various levy rates in terms of percent increase and
dollars available to allocate for different priorities of the Council.
Some of the items already discussed include how to provide adequate long term funding for
road construction and improvements and maintaining the funding for park improvements. The
majority of funding for these to funds comes from general fund transfers.
The plan for tonight is to generate discussion on the target levy amount as well as what
priorities get additional or enhanced funding.
2011 BUDGET OPENING DIALOUGE:
Two options face the Council in planning for the 2011 budget and related levy. The Council can base the budget
on the amount actually levied in 2010, or the Council can base the budget on the amount the city could have levied for
2010. There is difference of approximately $184,000. the chart below provides an illustration on the various options
open to the Council in planning the 2011 budget and levy.
Notes:
1. Levy limits are still in place for 2011. The current IPD is approximately 1.7% and this figure is used in the table below.
2. The City has the capacity to have a levy of approximately $5,000,000 for 2011
3. Union contract calls for a 2% wage increase and PERA increases from 7% to 7,25% January 1, 2011 and is reflected in
labor costs for the Union. Non -union wages are reflected in the set -aside amount.
4. We estimate the increase in the Fire District Contribution at $10,000.
5. We estimate the SLMPD payment at 2 %, or about $20,000.
Base amount needed for Wages, Benefits, Fire and Police
City Wages and Benefits
Fire District increase
33,000
13,000
SLMPD increase 20,000
Base Amount needed 66,000
Percent increase from Current Budget 1.23%
Percent increase in current levy 1.38%
FUNDING SCENARIOS
Current levy as base IPD at 1.7%
Current levy as base and increase of 2%
2010 Levy
$
4,776,292
2010 Levy
$
4,776,292
IPD Adjustment at 1.7%
$
81,197
Levy increase of 2%
$
95,526
2011 Target levy
$
4,857,489
2011 Target levy
$
4,871,818
Wages, benefits, fire and police
$
66,000
Wages, benefits, fire and police
$
66,000
Net for addition priorities
$
15,197
Net for addition priorities
$
29,526
Allowable levy as base IPD at 1.7%
Current levy as base and increase of 2%
2010 Allowable Levy
$
4,960,958
2010 Levy
$
4,776,292
Difference from 2010 Actual levy
$
184,666
IPD Adjustment at 1.7%
$
84,336
Levy increase of 3%
$
143,289
2011 Target levy
$
5,045,294
2011 Target levy
$
4,919,581
Wages, benefits, fire and police
66,000
Wages, benefits, fire and police
66,000
Net for addition priorities
$
203,002
Net for addition priorities
$
77,289
Actual levy increase from 2010
5.63%
FUND BALANCE DISCUSSION
The fund balance policy states the city will maintain a fund balance between 60 %- 65% of the operating budget
and amounts over the target shall be reduced by the City at a rate of no more than 1% per year.
As a general rule, a city does not want to rely on the general fund to cover ongoing and regular operational
costs other than to sustain operations between tax payments. Excess fund balance is best used to bolster or
fund capital type accounts such as storm water, parks, roads, etc. Using the fund balance to offset increases
in general operations will result in a large increase in the property tax when reserves run low.
sated undesignated, unreserved fund balance as of December 31, 2009 $ 3,555,224
sated 2011 General Fund operating budget $ 5,438,404
of estimated 2011 General Fund operating budget $ 3,534,963
'A mount fund ba i s "overfunded" $ 20,261
As is seen in theta ble above, the city does not have substantial room to use reserves to cover capital or
ongoing operational expenses based on current policy.
OPTIONS
1. Levy the minimum necessary to cover anticipated increases in wages, benefits, and public safety
2. Increase the current levy to allow for the anticipated increases and provide for additional funding for
identified operational priorities.
3. Hold the levy at the current amount and find cuts in operations to allow for anticipated increases.
4. Use existing fund reserves to cover anticipated increases in the operating budget.
5. Use a portion of the proceeds from the sale of the liquor stores to offset operational or capital funding needs.