HomeMy WebLinkAbout7B - Proposed 2009 Budget Reductions Report
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
JUNE 15, 2009
7B
JERIL YN ERICKSON, FINANCE DIRECTOR
CONSIDER APPROVAL OF A REPORT IDENTIFYING PROPOSED
2009 BUDGET REDUCTIONS
Introduction
The purpose of this agenda item is to consider approval of proposed budget
reductions which have been identified in an effort to offset the projected General
Fund revenue shortfalls for 2009.
Historv
In December, 2008, the City Council adopted the 2009 budget which reflected a
reduction in development-related revenues and an anticipated $226,000 cut from
the State for Market Value Homestead Credit (MVHC) aid.
The 2009 budgeted expenditures were reduced to coincide with the anticipated
cut in MVHC as follows:
I Eliminate Economic Development Director position
I Decrease fuel budgets
I Eliminate Lifeguard positions
Delay Fire Chief hiring until 7/1/09
Decrease litigation budget
I Delay conversion from microfiche to Laserfiche
I Decrease conference and seminar budgets
I Total
$ 80,000
55,000
34,000
24,000
15,000
10,000
8,000
$ 226,000
On June 1, 2009, a council workshop was held to discuss the expected revenue
shortfalls for 2009 and to address 2010 budget challenges. Staff had projected
an additional $475,000 in revenue shortfalls due to a further decline in
development-related revenues (i.e. building permits, plan check fees, etc.) and
investment interest earnings. A comprehensive list of expenditure reductions
(i.e. eliminating non-emergency overtime, deferring equipment purchases,
reducing training costs, allocating expenses to enterprise funds, etc.) was
compiled to offset the projected revenue shortfall and shared with the city
council.
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The following table reflects a summary of the expenditure reductions by
department:
Summary by Department
Ordinance
City Manager
Boards & Commissions
Accounting
Personnel
Communications
Community DevelopmenUNatural Resources
Data Processing
Police
Fire
Buildings & Transportation Services
Engineering
Streets
Recreation
Parks
Library
Economic Development
Contingency
Transfers
$
4,000
11 ,000
1,500
9,925
8,650
16,120
10,827
35,000
75,122
28,450
19,275
94,000
5,000
21,560
40,000
10,000
7,380
27,191
50,000
475,000
Current Circumstances
Generally speaking, City staff sought reductions which would have a minimal
impact on the level or quality of services currently delivered to the residents of
Prior Lake.
The majority of the contingency reserve account balance was preserved to
maintain maximum flexibility if some unforeseen event occurs such as a major
repair.
The transfer referenced above is a transfer from the Revolving Equipment Fund
to the General Fund of the savings realized on the acquisition of new equipment
earlier in 2009. The transfer does not affect the financial viability of the fund.
Staff would seek formal council approval to make this transfer later in 2009 if the
funds are needed.
The summary also reflects a partial reallocation of salaries and benefits for the
Public Works Director, Engineering Technician II, and Building and
Transportation Director positions to the enterprise funds. Staff believes these
allocations are appropriate and is considering implementation either in 2009 or
2010.
The remaining budget reductions (i.e. eliminating non-emergency overtime,
deferring equipment purchases, reducing training costs, etc.) will be reevaluated
and considered for reinstatement in the event revenues collected exceed current
projections. Some objectives will be delayed until either later in the year or to
future years.
Conclusion
By accepting the report without actually amending the 2009 budget, City staff will
maintain flexibility in reinstating some of these expenditures if the revenues
collected exceed current projections.
FINANCIAL
IMPACT:
The impact is as stated in the above table. City staff has used conservative
revenue projections based on current data available. We will continue to closely
monitor revenue collections.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Approve the budget reduction report as presented.
2. Amend the budget reduction report.
3. Delay action on the budget reduction report if the Council requires
additional information.
RECOMMENDED Alternative #1
MOTION:
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Frank Boyles, CVa) er