Agenda - Council - 06/23/1981 - Laserfiche WebLink

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Prepared 6/19/81 CITY OF RAMSEY FINANCIAL ANALYSIS An analysis of the City of Ramsey's financial trends and projections has been prepared to guide the city in preparing its Capital Improvement Program. The analysis shoWS whether there will be any surplus operating revenue to finance future capital improvements and it identifies the previous capital improvement financing resources used by the City, and future debt repayment obligations. This analysis also raises some important financial policy issues that the city should consider such as the levy limitation, aid distribution formula, and fiscal disparities tax base sharing formula. I. Population Growth Analysis_ For projection purposes, three alternative population growth assumptions have been developed, to evaluate the impact on revenue and expenditure projections. Figure 1 shows how these alternatives were developed. First, population growth from 1970 to 1980 was graphed. Ramsey's growth during this period was 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 during the 1970-75 period, with the rate slowing somewhat from 1975-80. Compounded annually, the growth rate from 1975-80 averaged out to 7.4% per year, compared to 24% per year from 1970-75. The high population projections assume that the 7.4% per year population growth rate will continue. The low population projection is based upon the Metropolitan Council's projections for Ramsey, which if compounded annually works out to 3.2% per year. The medium projections at 5.3% per year, are simply the average between the high and low. II. OPERATING REVENUE AND EXPENDITURE PROJECTIONS The City's budgets over the past four years (1978-1981) have been analyzed to determine the growth trends in revenues and expenditures. This information is shown in Figures 2 and 3. The trends have been used to make operating revenue and expenditure projections for the next five year period to determine whether there will be any surplus current revenue to pay for capit'al improvements. Previous trends in capital improvement oriented revenues and expenditures provide a picture of how capital improvements have been financed in the past, the debt repayment obligations of the city, and future likely revenue sources for capital improvements. 9peratin~ Revenue. Operating revenues have increased an average of 20.5% over the past four years. Some of this increase is due to inflation, and some is due to population growth in the City. By far the City's largest source of operating revenue is property taxes, which make up 74% of the 1981 operating