The document summarizes the city of Duluth's budget creation process and options for balancing the FY2010 budget. It includes a timeline of budget preparation from January to June, an overview of FY2009 revenues and expenditures, proposed cuts to department budgets for FY2010, and additional options like increasing property taxes or reducing services to address a projected $2.3 million revenue shortfall.

1. Citizens Budget Committee FY2010 Budget City of Duluth

3. Budget Creation Overview CITY OF DULUTH BUDGET CREATION OVERVIEW January – At the beginning of the month, the City Clerk and Budget and Accounting Manager will set the “Budget Calendar”, which are the dates when meetings will take place and deadlines for submitting budget materials. Budget and Accounting Manager will also send the Department Directors their budget history and current year’s request Forms. February -Department Directors review budget history and document the current years budget request. They also start preparing their Capital Improvement budget, both rollover and new. March - Meetings with Department Directors and Budget and Accounting Manager to discuss first drafts of department budgets. April - Final department budget drafts are due. Review revenue projections, both first and second drafts. Capital Improvement budget submitted and reviewed for all departments. Departmental, Capital Improvement budgets and revenue projections reviewed by Budget Committee (City Administrator, City Clerk and Police Chief). Capital Improvements projects ranked by Budget Committee, then Mayor and Council. Budget drafts submitted to Mayor, Council and City Attorney. May - Post ad in newspaper for time and date of the two/ three Mayor and Council budget review sessions. Conduct review sessions and implement requested changes. Post ad in newspaper for time and date of the upcoming Public Hearing and Budget Adoption. June - Conduct public hearing on the budget for citizen input. Budget is adopted by Mayor and Council a council meeting.

4. Active Municipality Definition

5. FY 2009 Budget City of Duluth

7. Total Expenditures

8. 2009 General Fund Revenues

9. FY 2009 Budget Summary FY 2009 Budgeted General Fund Revenues 16,728,371.00 FY 2009 Budgeted Expenditure Total 18,065,960.00 Prior Year Reserves Budget to Balance FY 2009 Budget -1,337,589.00 General Fund Revenues Needed to Balance Budget 16,728,371.00

10. FY 2009 Revenue Analysis & Projection General Fund Collections thru 1-31-09 10,367,378.14 Anticipated Revenues Collections-All Departments-February thru June 4,200,000.00 Projected General Fund Revenues thru June 30, 2009 14,567,378.14 General Fund Revenues Needed to Balance Budget 16,728,371.00 Projected Revenue Shortfall for Current Year Budget -2,160,992.86

11. Prior Year Revenue Comparison FY 2008 Budget General Fund Revenues 15,554,375.00 General Revenue Collections thru 1-31-08 11,301,633.22 Percent of Budget Collected 0.727 FY 2009 Budget General Fund Revenues 16,728,371.28 General Revenue Collections thru 1-31-09 10,367,378.14 Percent of Budget Collected 0.620 Additional Revenue needed to Equal FY 08 Collections 1,794,147.78

12. Staff Recommendations Revenue Collection Shortfall 2,160,993.00 Expenditure Reductions by Departments -500,000.00 Hiring freeze, non replacement in vacancies saves in benefits etc. -150,000.00 Remaining Shortfall 1,510,993.00 Current Funds Available 12,863,881.73 Less 3 Months Operating Reserves -4,516,490.00 Less Capital Reserve Fund -2,748,789.90 Less Obligated FY 09 Capital Improvements -2,411,875.00 Less Obligated FY 09 Expenditures -1,337,589.00 Available Balance 1,849,137.83

13. FY 2010 Budget City of Duluth

15. Preliminary General Operating Expenses BUDGET CHANGES BY DEPARTMENT FY09 FY10 PDP PERCENT DEPARTMENT BUDGET BUDGET CHANGE CHANGE Mayor & Council 1,705.27 2,114.88 409.61 24.02% City Administrator 295.52 256.91 -38.61 -13.07% City Clerk/Business Office 1,435.03 1,391.86 -43.17 -3.01% General Government 1,758.36 1,463.34 -295.02 -16.78% Public Information/Marketing 623.81 498.42 -125.39 -20.10% Municipal Court 2,075.51 2,070.21 -5.30 -0.26% Planning & Development 1,186.26 1,053.10 -133.16 -11.23% Parks & Recreation 1,212.47 1,228.52 16.05 1.32% Public Works 1,125.76 1,113.80 -11.96 -1.06% Police 6,658.68 6,171.08 -487.60 -7.32% Total All Departments 18,076.67 17,362.12 -714.55 -3.95% CUTS IN STAFF SALARIES Merit Increase 244,174.23 Cost of Living Increase 102,921.33 FICA Tax Savings 26,552.81 Total Salary Cuts and Tax Savings 373,648.37

16. FY 2009 Budget Summary FY2010 Budgeted General Fund Revenues 15,000,000.00 FY2010 Budgeted Expenditure Total 17,362,120.00 Projected General Fund Revenue Shortfall 2,362,120.00

18. Millage Rate History

19. Property Tax Bills With a Millage Increase Property taxes are calculated based on the assessed value of a home. The assessed value is calculated by multiplying the fair market value of the home by 40%. The property tax bill is calculated by multiplying the assessed value by the millage rate. NOTE: The property tax bill would be further reduced by any exemptions available to the property tax owner and the tax bill its self would be reduced by any tax credit available. 1 MILL INCREASE = APPROXIMATELY $1,000,000 IN ADDITIONAL FUNDS. Fair Market Value Assessment Assessed Millage Property Tax Increase Per of the Home Percentage Value Rate Bill Month CURRENT MILLAGE RATE $ 150,000 40.00% $ 60,000.00 5.191 $ 311.46 $ 250,000 40.00% $ 100,000.00 5.191 $ 519.10 $ 350,000 40.00% $ 140,000.00 5.191 $ 726.74 $ 450,000 40.00% $ 180,000.00 5.191 $ 934.38 ONE MILL INCREASE $ 150,000 40.00% $ 60,000.00 6.191 $ 371.46 $ 5.00 $ 250,000 40.00% $ 100,000.00 6.191 $ 619.10 $ 8.33 $ 350,000 40.00% $ 140,000.00 6.191 $ 866.74 $ 11.66 $ 450,000 40.00% $ 180,000.00 6.191 $ 1,114.38 $ 15.00 TWO MILL INCREASE $ 150,000 40.00% $ 60,000.00 7.191 $ 431.46 $ 10.00 $ 250,000 40.00% $ 100,000.00 7.191 $ 719.10 $ 16.66 $ 350,000 40.00% $ 140,000.00 7.191 $ 1,006.74 $ 23.32 $ 450,000 40.00% $ 180,000.00 7.191 $ 1,294.38 $ 30.00