HomeMy WebLinkAboutagenda.council.worksession.20080707MEMORANDUM
TO: Mayor and City Council
FROM: Don Taylor, Director of Finance and Administrative Services
THRU: Steve Barwick, City Manager
DATE OF MEMO: July 3, 2008
MEETING DATE: July7, 2008
RE: Guidelines for 2009 Budget Development
REQUEST OF COUNCIL: This is to provide the Council with the general pazameters around
which the staff intends to develop the proposed 2009 budget. Staff seeks feedback and any
policy guidance that the Council may wish to provide.
BACKGROUND: The City's financial condition continues to be healthy despite weak
economic conditions in general around the country. Nevertheless, prudence calls for a
conservative approach to the City's budget development as there are emerging signs of concern.
Rising fuel prices are certain to affect travel habits and the airline industry has been under a
tremendous fiscal strain, raising fazes where it can and cutting mazginal flights. It is unclear at
this point how much this might affect travel to Aspen.
The City's ending general fund balance for 2007 was $9,986,602 which represented 43% of
general fund revenues for that yeaz. In the 2008 fiscal year, through May, tax receipts aze mixed.
Sales and Lodging taxes, the City's most important revenue source, continue to be strong. Sales
taxes are up 10% YTD through May and Lodging taxes are up 13% over the same period.
Undoubtedly, much of this increase is attributable to the excellent snow year that we had this
season. Sales and Lodging taxes are currently projected to increase only 4% for the remainder of
the year and for 2009.
Property tax revenue is budgeted to increase 7.7% in 2008 due to continued new construction and
rising values in the 2006 valuation year. Aspen has been affected by the national real estate
downturn also, albeit to a much smaller degree. Sales activity as measured by dollaz volume has
decreased substantially in 2008 but values seem to be holding steady. Property tax revenue is not
expected to be affected for the 2008 valuation year. 2009 revenue should see modest growth as
new construction hits the tax rolls. Current estimates aze fora 3-4% increase. It is an off
assessment year so their will not be changes due to reassessment.
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The real estate mazket has affected Real Estate Transfer Tax Receipts. RETT receipts are down
37% from last year through June. This will have an affect on how much the City can Bond for
completion of Burlingame 2&3. For 2009, RETT revenues will be projected to rebound about
10%. It is very difficult to forecast this revenue source as it highly volatile.
Permits for new construction also aze declining and fee revenue from this activity will be
significantly less than originally budgeted.
DISCUSSION:
Given the Revenue forecast summazized below, Department heads have been asked to submit
their operating budgets within the pazameters shown under the expenditure heading. They have
been asked not to request additional staffing unless it is a critical need.
Variables
Year to Year increase
Revenues 2009-2012
Inflation 4.00%
Sales Tax 4.00%
Property Tax 4.00%
Recreation Fees 3.00%
Fees 4.00%
Com. Dev. Revenues 2.00%
Overhead 5.10%
Franchise Fees 4.00%
Investment interest 5.00%
Expenditures 2009 2010-2012
Labor 5.00% 5.00%
Health Insurance 2008 - 09 5.00% -
Health Insurance 2010 - 11 - 6.00%
Travel and Training 1.00% 4.00%
Services 1.00% 4.00%
Supplies 1.00% 4.00%
Global Warming 1.00% 4.00%
Contributions 1.00% 4.00%
Ongoing Supp Req 1.00% 5.00%
Transfers 1.00% 4.00%
Although estimates are very preliminary at this time, developing a proposed budget under these
parameters should bring us close to the ending tazget fund balance for the general fund that the
Council has adopted by policy.
Staff solicits any other policy guidance that the Council wishes to provide to assist the
development of the 2009 proposed budget.
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