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has increased 22.01 % since October 2003 while City employees have received a total of <br />14.43% in cost of living adjustments. <br />5. Annually reoccurring revenues should equal or exceed annually reoccurring expenditures. <br />In short, the City should have a balanced budget operationally. This does not preclude <br />onetime or infrequent expenditures for capital items and projects which may be funded <br />by either bond debt or reserves that have built up in excess of required and prudent levels. <br />With regard to the above guidelines, the proposed budget does the following: <br />1. The current tax rate of .52 per $100 is maintained. This was done in spite of the fact that <br />the freeze adjusted taxable value dropped by $21,474,000 which is the equivalent of <br />$111,665 in tax revenues. <br />2. Reoccurring expenses were all included and provided for in the operational budgets of <br />the General and Water & Sewer Funds. These two funds are the primary operating funds <br />of the City. <br />3. Non-reoccumng or infrequently occurring expenses were placed in two restricted use <br />funds (Capital Projects Fund & Equipment Replacement Fund) to distinguish them from <br />normal operating expenses. These capital expenditures are being funded using reserves in <br />excess of those needed to maintain financial stability and a strong credit rating. <br />4. All debt related interest and sinking funds are adequately funded so as to make the <br />necessary principal and interest payments as they come due. <br />5. All regular full time employees and the handful of regular part time employees will <br />receive a 3% cost of living adjustment. In addition, an ordinance will be presented to the <br />Council to allow employees to increase their current 6% contribution to their TMRS <br />pension plan to a 7% contribution. This increase in contribution by employees will <br />partially offset the proposed COLA adjustment but will cause a noticeable retirement <br />improvement over time. Given the shaky future of Social Security benefits, this is a <br />critical benefit for employees. This contribution increase does not apply to certified <br />firefighters who have opted to have a separate retirement plan and already contribute <br />12% to that retirement plan. <br />The following sections highlight points of interest in the budget. <br />General Fund & Water-Sewer Fund <br />Revenues <br />l. Tax Rate. While the City will be maintaining its .52 cent tax rate, the revenue for <br />operations (O&M) to be generated by that rate is estimated to drop by $162,178 from the <br />current budget amount. <br />2. Sales Taxes. The City is expected to end fiscal year 2010-11 with an increase in actual <br />sales collections of over 3%. Budget numbers for 2011-12 reflect this increase. <br />3. Hotel Occupancy Taxes. The new budget reflects the lower collection pace of the 2010- <br />11 year. The decrease is almost 13%. If La Quinta comes out of bankruptcy in stronger <br />financial position and the Ramada Inn is able to get back on track, this line item could <br />turn around. However, I am unwilling to budget based on what I hope will happen. As is <br />our normal practice, revenues are budgeted conservatively. <br />6 <br />