01 13 Budget Memo4,�
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CITY F 0
MINNESOTA
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: January 10, 2014
SUBJECT: 2014 Budget Adoption
At the December 9, 2013, City Council meeting, the Council adopted a levy that was less than
the proposed levy by $39,285 and directed staff to identify potential General Fund budget
reductions for consideration by the Council in January. I subsequently asked department heads
to identify potential reductions in their departmental budgets that Administrative Services
Director Dan Jordet and I then reviewed and prioritized. Attached is a memo from Dan Jordet
outlining options for balancing the 2014 General Fund budget based on our review of the
suggested reductions and additional review of the proposed budget.
During the budget review and discussions prior to adoption of the proposed levy in September,
the General Fund operating budget was reduced producing a levy surplus of $34,917 based on
the initial proposed levy. The Council discussed whether to reduce the 2014 proposed levy by
$34,917 or to leave the levy as is and use the $34,917 to reduce future years' levies by
allocating the $34,917 to future debt payments. The Council directed staff to leave the levy as
projected and allocate the $34,917 to debt service; in September the Council adopted a
proposed levy that included the $34,917.
The options provided for balancing the budget include two options: The first option eliminates
the debt service transfer and reduces the General Fund budget by $4,368 to provide for a
balanced 2014 General Fund budget. By selecting this option the City obtains a balanced
General Fund budget and leaves the question of dealing with full retirement of debt issues to a
future year. Alternately, General Fund fund balance could still be allocated to this purpose.
The second option reduces the General Fund budget by the full $39,285 levy reduction to
provide for the debt transfer. Because the $34,917 transfer to debt service is not required, but
was only included as a suggestion of a "best use" of any surplus, it does not affect the City's
ability to meet the 2014 debt service payments. You will notice that the budget adjustments
needed to reduce the budget by $39,285 include some reductions that will affect service levels
or the method in which service is provided. There were some departments such as elections,
police and fire and consulting contracts that were not reduced at all because a reduction in
service is simply not acceptable or is not contractually feasible.
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