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l� i � <br /> COUNCIL MEMORANDUM <br /> #2005-09 <br /> December 15, 2005 <br />' TO: The Honorable Mayor and City Council Members <br /> , <br /> FROM: Steve Garma�"City Manager <br /> .y`� ' <br /> RE: Annual Tax�Levy <br /> SUMMARY RECOMMENDATION: Staff recommends approval of a proposed plan to <br /> levy a dollar amount equal to a rate of$1.27. <br /> BACKGROUND: As you prepare to make a decision regarding the annual property tax <br /> levy, it's important that we remember that in approving the proposed plan to levy at a rate of <br /> $1.27, we would be in a position to serve as leaders in creating the blueprint for reaching a goal <br /> that we all want — an improved quality of life with lower taYes for the residents of this <br /> community. If this plan is approved, we would place ourselves at the forefront of a movement to <br /> limit the amounts we ask our residents to pay in property taxes. Such a move would show <br /> leadership, vision and continue the pattern of fiscal responsibility that you as a council have <br /> worked to follow for several years now. <br /> It is also important that, in making this decision, we remember where we were financially <br /> in the not-so-distant-past so that we do not place ourselves in a precarious financial situation <br /> once again. <br /> Between the year 2000 and 2002, we saw our ending fund balance drop by more than $6 <br /> million. It was at this time that the Decatur City Council was forced into a position of raising <br /> several taxes in order to cover the shortfalls that were sure to come. It has been suggested that we <br /> levy the same amount as last year, a move that in our opinion will begin to lead us back to the <br /> situation we faced in 2002. Our budget will continue to increase because it is so heavy in <br /> personnel associated costs and we do not believe that we will see huge increases in other <br /> revenues in the near future. We expect that the telephone tax, utility tax and food and beverage <br /> tax will all level out, which would leave sales and income taxes to cover all future <br /> increases. With a 3.5% increase each year we will see our expenses go up about $1,400,000 per <br /> year and we do not believe that we will see enough increase in sales tax and income tax to cover <br /> these additional increases. Add to that substantial increases in pension payouts that have already <br /> come about and we, very soon, will have a very serious problem. To put this in perspective, our <br /> reserve amounts now are about the same as they were just prior to the downturn, however, they <br /> �� <br />