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I I I I I I I I I I I i I I I ! I ! I CITY OF RAMSEy FINANCIAL ANA~ Y ~ISi Prepared 5/82 An analysis of ~he~City of Ramsey's financial trends and projections has been prepared to gUi~e the City in preparing its Capital Improvement Program. The analysis shows Whether. there will be any surplus operating revenue to finance future capital ~mp~ovements and it identifies the previous capital improvement financing resou~.~ ce~ used by the City and future debt repayment obligations. This analysis also,raises some important financial policy issues that the City should considerlsu~h as the levy limitation, aid distribution formula, and fiscal disparit!es~tax formula. I. Population GroWth Analysis For projection~purposes, three alternative population growth assumptions have been developed to evaluate the impact on revenue and expenditure pro- jections. Figure 1 shows how these alternatives were developed. First, population growth from 1970 to 1980 was graphed. Ramsey's growth during this periodilwaS over 300%. The percentage increase is extremely high due to the small base population in 1970, so this percentage may not be used to project population growth. Furthermore, more than half of this growth occurred dtU~in~ the 1970-1975 period, with the rate slowing somewhat from 1975-1980. ~Co~ounded annually, the grow-th rate from 1975-1980 averaged out to 7.4%Pe~ year, compared to 24% per year from 1970-1975. The high population projections assume that the 7.4% per year population growth rate !~wi~l continue. The medium population projection is based upon %he Metropo~ita~ Council's projections for Ramsey which if compounded annually, wOrk~ out to 3.2% per year. The low projection provides for no population!~ro~-h. The percentage increase in population used to calculate the 1982 le~y limitation is 1.4%. A turn-around in the economy· such as a return to 1Ow iDterest rates, would change the population growth back to the high range II. .C~eratinq -~e~ven~e and Expenditure Projections The City's budggts over the past four years (1978-1981) have been analyzed to determine the growth trends in revenues and expenditures. This informa- tion is showgn in Figures 2 and 3. The trends have been used to make operat- ing revenue andlexpenditure projections for the next five year period to determine w~ethgr there will be any surplus current revenue to pay for capi- tal improv~mentM. Previous trends in capital -improvement oriented revenues and expenditUreS provide a picture of how capital i~mrovements have been financed in ~helpagt, the debt repayment obligations of the City, and future likely reven~e ~ources for capital improvements. For 1982, adopted budget figures have been used in addition to estimated improvements such as street improvements, sealcoating, etc. to establish the estimated rRnges for revenues and expenditures.