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1. Preliminary BudgetBudget Message TO: The Honorable Mayor William E. Boharski Council Members Ward I: Ward II: Ward III: Ward IV: Citizens of Kalispell Ron Van Natta Dale Haarr Jim Atkinson Doug Scarff FROM: Chris Kukulski, City Manager DATE: May 11, 2000 Don Counsell Fred Leistiko Randy Kenyon Duane Larson I would like to start by thanking our Finance Director, Amy Robertson and her staff. Without their skills and countless hours of hard work this budget would not have been completed. The City Manager, with the assistance of City staff, is required to submit a preliminary budget to the City Council. This 2000/2001 year document has been a real challenge, particularly in light of Senate Bill 184. Senate Bill 184 caps taxable revenues so that they cannot be higher than the previous year. This is accomplished by a complex formula which implements re -appraised values, while decreasing taxable values, to be combined with a floating mill, resulting in the previous years revenue. This formula offers no consideration for inflationary cost increases. This budget has been prepared with the presumption that the City Council will utilize the floating mill in order to generate the same amount of revenue that we collected in the 1999/00 budget year. You may recall that last year's budget was described by Interim Manager, Al Thelen, as a "status quo budget". This is not the case for this proposed budget. It is my belief that during these times of prosperity, it is the City's responsibility to its citizens to ensure that the community is in excellent working condition. This is the time to be rebuilding infrastructure, replacing old equipment, and preparing the City for leaner years that are guaranteed in the future. This is particularly challenging primarily because of the City's dependency on property taxes, which as a result of the Montana State Legislature, have been capped. Growth through new construction and/or annexation is the only mechanism to offset inflationary costs. The Census Bureau estimates Kalispell's population to be 16,089 which is 26% higher than the 1990 census. These additional 4,172 residents are a welcomed addition to our community and they, along with the original 11,917, deserve the best services available. BUDGET SUMMARY The overall expenditures are down by $6,903,344 (four million associated with the Stream project). The proposed FY/2001 budget for the City is $21,491,118 compared to $28,394,462 last year, or a 24.31 % decrease. A more detailed summary reflects: Budget Expenditure Comparison FY 2000 FY 2001 PERCENT CHANGE GENERAL FUND 4,791,342 4,829,890 0.80% SPECIAL REVENUE 12,212,386 6,631,978 -45.69% DEBT SERVICE 195,181 496,262 154.26% CAPITAL PROJECT 3,445,000 965,000 -71.99% ENTERPRISE FUNDS WATER 1,693,051 2,535,874 49.78% SEWER 2,989,174 2,955,219 -1.14% STORM 735,993 320,603 -56.44% SOLID WASTE 856,723 949,161 10.79% AMBULANCE 511,412 750,931 46.83% INTERNAL SERVICE FUNDS 964,200 1,056,200 9.54% TOTAL BUDGET 1 28,394,462 21,491,118 -24.31% • Changes in Special Revenue Funds reflect the reduction of projects within the Downtown and Airport Urban Renewal Districts and the UDAG loans related to Stream. • Changes in Debt Service Funds reflect the Stream International project Board of Investments loan funded by increment from the Westside Urban Renewal District. The G. O. Bond fund for the pool was debt service was paid off FY2000. • Capital Projects Fund budgets have decreased as a result of the Stream project (budget amended FY2000). The Sidewalk & Curb Fund appropriation remains the same. • Water Fund increases are related to the US-93 North water main project, reservoir roof replacement and the meter replacement/upgrade program. • The Ambulance is now covering 15% of the firemen's wages and 75% of the EMS director's salary. ii GENERAL FUND SUMMARY The proposed budget for the general fund totals $4,829,890 compared to $4,791,342 for last year or a 0.80% increase ($38,548). A comparison of the expenditures of this fund by function is shown below: General Fund Totals by Function FY 2000 FY 2001 PERCENT CHANGE PERSONNEL SERVICES $3,525,388 3,560,587 1.00% M & O 870,557 928,028 6.60% CAPITAL OUTLAY 346,789 206,950 -40.32% DEBT SERVICE 8,103 30,626 277.96% OPERATING TRANSFERS 40,505 103,699 156.02% TOTAL 4,791,342 4,829,890 0.80% The reoccurring expenditures such as personal services and M & O represent a collective increase of 6.6% while capital, a one time expenditure, represents a decrease of 40.32%. The debt service increase relates to short term borrowing for operational equipment and the increased operating transfer is to match grants for law enforcement and ISTEA. All of these trends are warning signs of poor fiscal health within the General Fund. The City has worked hard to reverse these trends though changes in legislation have made this nearly impossible. TAX LEVIES FOR 1999 COMPARED TO 2000 FUND 1999 MILLS 2000 MILLS 2001 MILLS* General 67.66 69.54 70.16 Comp. Insurance 9.00 10.28 10.28 Retirement 14.00 14.39 14.39 Health Insurance 18.00 18.50 18.5 G.O. Bond 2.5 1.54 0 TOTAL MILLS 111.16 114.25 114.25 * or equivalent number of mills based on the floating mill levy calculation to generate the same revenue. iii The general fund increase is directly related to salary increases. Salaries now amount to 73.7% of the general fund. If one assumes 73.7% of the mill levy in the general fund for personal services (49.3 mills), adding this to the retirement levy (14.3 mills), the health insurance levy (18.5), and the Workman's Compensation portion (6.18 mills)of the insurance levy, it totals 88.37 mills of our total 114.25 or 77.35% of our total levy being spent for personal services. The levy for the City -County Health Department is administered by the County. The City of Kalispell levies the same levy for the City that is adopted by the County which was 4.402 mills last year. We have not received a copy of the Health Board's request at the time of this printing. The Health Director will present this budget to you in the near future. ENTERPRISE ACCOUNTS WATER The water budget has increased 49.78 % over the previous years budget. This is primarily due to large capital projects that are included in the budget. The first is the replacement of one of the City's main arterial water lines that runs underneath US-93 north from Center Street to the Sunset /Main intersection. The second project is the replacement of the roof over the City's reservoir. These two projects total over one million dollars. An aggressive meter replacement program is also included in the budget. This will serve two primary purposes: I" is to accurately calculate the use of water for billing purposes; 2nd is to improve the efficiency and accuracy of meter reading. This project should have a positive effect on the water funds revenues. Funding for these projects will necessitate an increase of 13 cents per thousand in the water rate. This increase will cost the average family of four an additional $1.95 per month. Water rates were last increased in 1991. The meters will be replaced through an amortized fee that will be placed on the water/sewer bill. SEWER The sewer budget has decreased by 1.1 % over the previous years budget. However, we are preparing for an extensive sewer extension project scheduled for next year. In order to phase in the rate increase necessary to pay for the project, sewer rates will be increased $ .15 cents per thousand this year. This rate increase will cost the average family of four $2.20 per month. Depending on the impacts of the meter replacement program, an equal or larger increase in rates is likely to be included in next years budget. The sewer fund will also be participating in the start up costs associated with the meter replacement program discussed under the water narrative. The meters are utilized to determine both water and sewer revenues. 1v SOLID WASTE The solid waste budget has increased by 10.79% over the previous years budget. The solid waste budget includes the replacement of a side -arm garbage truck ($165,000), and an additional full time employee. Results of an independent study that was conducted in 1998 concluded that the City was in good shape with regard to garbage collection. The service is exceptional at a very reasonable cost to citizens. The two areas of improvement were equipment replacement and manpower. The study recommends vehicles not exceed 8 years or 80,000 miles. Three of our vehicles have over 100,000. In this budget year alone we have spent $34,134 keeping the trucks on the road. Within the last 90 days, four of our six trucks were down as a result of needed repairs. This greatly reduces efficiency and ties up the City's central garage. We currently have one new truck on order (included as a carryover as delivery is expected after July Ist.) with a second included in the 2001 budget. We cannot afford to pay cash for this second truck so it will be financed over five years. The revenue to pay for the capital expenditures and manpower needs will require a $10 increase in residential garbage collection. This increases the rate from $70 to $80 per year. This is roughly $18 less than our nearest competitor. AMBULANCE The ambulance budget has increased by 46.83 % over the previous years budget. The ambulance fund is going through a major transformation. The proposed budget includes 75% of the EMT Directors salary plus 15% of the remaining firefighter/EMT salaries to be paid out of the ambulance fund. A tremendous amount of each fireman's time is spent on ambulance runs. The ambulance fund, which is an enterprise fund, needs to be covering all of its cost. The 15% will need to be gradually increased until it truly represents the cost of manpower necessary to run the department. Two additional firefighters/EMT's are included in the general fund budget as a result of this change. They will be the first additions to the department since 1976 and are expected to have a positive impact on the City's ISO insurance rating. Ambulance rates were increased during our May 1 meeting to cover these costs. In spite of the increased rates, the City retains some of the lowest ambulance fees in the State. PROPERTY TAX LIMITATIONS It is anticipated that our new revenue cap is $2,437,980 as identified by the calculation for the floating mill levy for the FY2000 budget. This cap can be exceeded if the increased taxable value is the result of one or more of eight growth factors identified in the statute. That number was a result of setting our levy at 114.25 mills. See Exhibit I for the prior year calculation. LIiFA RESIDENTIAL CITY PROPERTY TAXES IN KALISPELL,1999 -2000 Market Value 1999 Taxable Value MV x 0.3816 1999 Mill Levy 0.11116 2000 Taxable Value MV x 0.0371 2000 Mill Levy 0.11425 $50,000 $1,908 $212 $1,855 $212 $75,000 $2,862 $318 $2,783 $318 $100,000 $3,816 $424 $3,710 $424 $125,000 $4,770 $530 $4,638 $530 $150,000 $5,724 $636 $5,565 $636 $175,000 $6,678 $742 $6,493 $742 $200,000 1 $7,632 $848 $7,420 $848 This chart reflects the City property taxes owners paid on houses valued from $50,000 - $200,000 in 1999 and in FY/2000 -Class 4 residential property. It is unknown what the 2001 Special Session of the legislature has done to our values. The tax cuts in Class 6 & 8 personal property will require an across the board levy increase to generate the same revenue as the prior year. The telecommunication property tax rates dropped from 12% to 6%. Personal Property Reimbursements to the City will recover some of these costs but not all. This effects all milled funds and the Urban Renewal Districts. The floating mill levy calculation will be used to determine the needed mill levy. We anticipate receiving our valuations from the assessor in July, however, the recent legislative session may delay that. POPULATION AND MILL LEVY COMPARISONS FOR MAJOR MONTANA CITIES 1999 CENSUS POPULATION CITY FY 1999 TOTAL MILLS FY 2000 TOTAL MILLS 91,750 Billings 89.00 94.00 56,396 Great Falls 88.79 92.77 52,239 Missoula 139.84 146.63 29,936 Bozeman 138.79 141.31 28,306 Helena 86.19 92.20 16,089 Kalispell 111.16 114.25 10,015 Havre 115.49 130.18 8,685 Miles City 119.69 142.48 7,348 Livingston 127.15 133.95 6,159 Lewistown 126.74 143.66 5,875 Whitefish 88.25 97.90 4,205 Columbia Falls 97.97 120.39 Eight of the twelve largest cities in Montana had a higher city levy than Kalispell in FY00. We have to be careful in these comparisons because not all cities use property tax for the same functions. Some cities have their library within their property tax levy while ours is a County levy. Most of the largest cities such as Missoula, Bozeman, Billings, Helena and Great Falls have a cable TV franchise fee that generates the equivalent of more than 2 mills. Whitefish has a 2% resort tax which creates more revenue than their entire property tax levy. It is interesting to note the increase in mill levies across the state as a result of SB-184. It would appear that the smaller the city, the larger the negative impact of SB-184. While the levy comparisons are of interest, we need to be careful not to draw hard conclusions from the comparisons. FACTORS THAT CHALLENGED THE STAFF IN DEVELOPING THE BUDGET: A. Property valuations are unknown. The legislature continues to change the formula. We do not expect to see our valuations until July.. (See chart on Exhibit A showing property valuation compared to the past 13 years consumer price index.) B. Our gaming revenues have leveled off. From 1989 through 1997 our gaming revenues increased by an average of $98,600 per year. In 1989, the first year of gaming revenues, these funds produced an equivalent of 13.89 mills and peaked in 1997 when gaming revenues reached the equivalent of 53.12 mills. (See attachment entitled "Kalispell Gaming History" on Exhibit B and Exhibit C comparing gaming revenue with property tax revenues for the general fund.) C. As a result of the KPA strike, our revenues from fines and forfeitures were negatively impacted resulting in a smaller cash carry over into the proposed budget. Even with the rebound after the strike, we are still bringing in fewer dollars than we did in 1994 with more officers. This is primarily due to a change in collection philosophy within the municipal court. D. Salary adjustments primarily related to Police and Fire labor contracts and non -union annual adjustments have added to the FY/2001 budget, while shifts of Fire personnel to Ambulance, Parks vii personnel to Urban Forestry, and Street personnel to Water and Special Street Maintenance Funds resulted in only a $35,000 increase in Personal Services in the General Fund. E. Salary line items for AFSCME employees have not been adjusted. At the time of this memo the contract negotiations were not completed. F. Both the West Side and Airport tax increment districts have been extremely limited as a result of SB 184. Therefore, only essential projects have been included in either budget. G. Gas and Oil line items have been increased 30% in order to account for higher fuel costs. H. The need to begin funding the City's unfunded Compensated Absences which totaled $937,570 according to our 1999 audit report. We currently have zero dollars set aside to fund this liability with dozens of employees who are eligible for retirement today. Budget proposes $25,000. I. The need to begin funding an Equipment Replacement fund for general fund heavy equipment replacements. To date, there are no funds earmarked for this purpose. Budget proposes $25,000. FACTORS THAT ASSISTED STAFF IN DEVELOPING THE FY/2001 BUDGET: A. The development of the Forestry District prevented the City from having to make cuts in service levels in spite of Senate Bill 184. B. Reduction in debt service funded from property taxes as our swimming pool bond has been paid off. This also assisted the City in not having to reduce service levels in spite of SB 184. C. Annexation and bricks and mortar construction have allowed the City to combat inflationary increases in cost within the general fund. D. The Downtown Urban Renewal fund continues to provide 39.9% of the City's administrative budget estimated at $211,217. See Exhibit J for the Administrative Transfer formula. E. Federal grants received in police and park departments. F. Continued use of UDAG funds to fund operations of the community development office. G. Anticipated $90,000 in Lions Park right of way, funds to finance Parks Department capital and the ISTEA match. CITY DEBT DESCRIPTION DEBT AS OF JULY 1, 2000 Urban Renewal Bonds $455,000 Sewer/Storm/Waste Water Treatment Plant $5,443,000 viii Water Bonds $855,000 G.O. Bonds 0 Sidewalks & Curbs $42,903 S.I..D.'s $200,000 Board of Investments $479,840 TOTAL $7,475,743 The Storm Sewer portion debt will be amortized in July, 2001. The Urban Renewal debt for the downtown project will be paid off in July of 2002. The City's debt structure is in good condition. ENHANCEMENTS INCLUDED IN THE FY 2001 BUDGET: 1. Full implementation of the COPS program that added two police officers to the department. 2. Implementation of the school resource police officer program. 3. Development of a Fire Department plan related to ISO ratings and fire station location. 4. Quarterly updates of the City Code. 5. Development of facility plans for the storm, sanitary sewer collection system, and the water system. 6. Expanded and improved space for City Hall. 7. A new solid waste truck, new ambulance.* 8. Specific improvements to several parks: Begg Park, Parkview Terrace Playground unit, Greenbriar Neighborhood park, and Linderman (resurface tennis courts)TIF. 9. General improvements to several parks: Woodland, Lawrence, Depot, and Lions Parks. 10. Creation of the Urban Forestry District. 11. Trail improvements: Lawrence Park Trail & Bridge, Meridian Road Trail to KYAC. 12. A new roof for water reservoirs one and two. 13. Significant improvements to the water distribution system - Hwy 93 North main. 14. Continued street chip seal and overlay program. 15. Downtown Street scape Project. 16. Sidewalk improvements in the City and Downtown Urban Renewal areas. * See Exhibit L for Detailed Capital Improvements List. ix PERSONNEL The number of Full Time Employees (FTE) in the proposed budget has increased to 145. This is an increase of six and one half. A ten year tabulation of FTE's is shown on Exhibit D : 2 - Fireman/EMT's have been included within this budget. The department has not grown since 1976 while the community and its demands on fire and EMT services have increased drastically. The ISO review conducted in the early 1980's docked the City for insufficient manpower. This was further expressed in the 1999 ISO consultant review. Cost for these positions is being paid for with increased ambulance rates. %2 - An additional half time employee is need to assist with Ambulance collections. We have been using a temp for most of this year. 1 - City Accountant has been included in the budget. This position has been vacant for the last ten years. The responsibilities were being picked up by the Finance Director. Since that time the finances of the City have nearly doubled in scope. The accountant position will allow the Finance Director to be pro -active in analyzing costs, investments, rates and fees. The position will also relieve the personnel specialist from some of her pay -roll responsibilities which will allow her to stay on top of the ever increasing personnel issues facing the City (contract negotiations, testing, interviewing, etc.) Cost for this position will be shared between the general and enterprise funds. 2 - Parks and recreation positions have been included in the budget. Neither are new positions but they are reclassifications from Seasonal to Full -Time. In the past, Seasonal's have never been calculated into equivalent FTE's. The first position is the Outdoor Recreation Supervisor I, over the past three years this seasonal employee has worked an average of 2,027 hrs/yr. The salary and benefits for this position are 64% from program fees and 36% from the general fund. The second position is a Parks/Maintenance Laborer position. This combines the seasonal Parks Gardener position and Forestry Ground position previously funded as a seasonal park maintenance. One half of the salary and benefits will remain in the parks budget while the other half will be funded through the forestry program. 1 - Solid Waste hauler has been included in the budget. Over the past several years the public works department has been continually loaning an individual to solid waste in order to retain the solid waste pick-up schedule, avoid overtime pay and cover for sick and vacation schedules. The enterprise fund needs to be carrying its own weight in this regard. Some of the funding for this position comes from the a ten dollar per year increase in residential rates. x %2 - UDAG Administrative Assistant position is included in the budget. This former full-time position is being filled by a part-time person. This will bring the Community Development department back into being fully staffed. A General Fund Street position has been reallocated to the water fund. The Construction Inspector position has been eliminated and replaced with a Design Technician/Project Manager. The Police Department has eliminated the Chief s Secretary and created a Records Manager position utilizing the head dispatcher. The result will be a consolidation of work allowing for a reduction in dispatch equivalent to %a an FTE. The health insurance contribution remains the same for employees. We need to adjust the rates for retirees to reflect the same rates as our employees. Our self insured health fund still has a good balance, but our claims have exceeded our contributions for several years. We have used the interest on the cash balances to pay claims. Our premiums are the maximum allowed in any of our Union contracts and this is our cap. We have established a Health Committee to look at options to this funding issue. The City's liabilities for compensated time, accrued vacation and sick leave show a decrease of $25,025 from June 30, 1999 to April 2000. The dollar amount is the total of accrued vacation, 1/4 of accrued sick leave and all of the comp time accumulated. Compensated Absences Liability 6/30/98 6/30/99 4/30/00 POLICE $291,050 $349,226 $373,074 FIRE $202,873 $243,333 $210,215 OTHER GENERAL $155,152 $163,955 $158,089 BLDG. DEPT. $16,691 $17,277 $17,115 COMM. DEV. $7,803 $10,698 $9,336 ENTERPRISE FUNDS -T- $135,026 $148,495 $140,126 TOTAL PAYABLE $808,595 $932,984 j $907,955 We need to strive to reduce this liability. We need to continue to monitor the compensated time liability with a goal of eliminating it. The proper classification of our exempt employees has helped and we have reduced the use of comp time in the Police and Fire Departments when possible. xi The sick leave and vacation liabilities will increase slowly. Like some other cities, we are attempting to fund this liability with a designated reserve, using the interest on the reserve to fund new liabilities. This years budget has the first ever line item ($25,000) to begin funding this unfunded liability. The 1999 Audit report showed this liability to be $937,250 which included Parking Commission. CASH CARRY OVER - GENERAL FUND The City's cash carryover for the general fund 6/30/2001 is projected to be $730,334 or 15.12% compared to last year's budget projection of $764,044 and 15.98%. The projected actual cash carryover for FY 2000 is now projected to be $837,895 or 17.83%. The difference in the 2000 projection developed a year ago and the actual relate to: A number of general fund line items involving several departments which will not spend all of their allocations estimated at approximately $81,000 in total. Revenue received is projected to be slightly higher than anticipated. Gaming revenue is up, corporation tax down. Personal property taxes have not been billed yet so these projections could change. If everything in the FY/2001 budget were to happen as planned and projected, the City would use $66,561 of our general fund cash reserve, but it will not, and the reserves will be okay. A good guideline and policy for cash carryover for the general fund is two months operating expenditures or 16.66%. While we are a bit short of this in the proposed budget, I am confident that at the end of FY/2001 we will be above 16.66% as revenues are projected conservatively and we will not expend all of our appropriations. The Exhibit E reflects the City's cash balances for the general fund since 1987. It is important for the City to manage these balances. State law limits cash carryover by fund to 50% of the annual operating costs. The cash balances including the percentages of carryover are shown on all of the fund revenue pages. Cash Carryover in the tax funds is the second half tax receipted received the 151' of June (and July) which is our carryover to operate until the December tax receipts. FACILITIES PLANS The City Council approved funding in Public Works, Sanitary Sewer, Storm Sewer System and the three increment districts to develop new facility plans. The contract for these plans are expected to be approved within the next thirty days. These plans are long over due and will be a tremendous guide to make future decisions. These plans will be developed over the next eighteen months thus carrying them into this proposed budget cycle and possibly next years. xll STREET IMPROVEMENTS The street chip/seal and overlay programs are shown on Exhibit K . The City has funds from the gas tax and increment districts that total $358,300 to be used in FY/2001, plus $201,831 as a projected carryover from FY/2000. This represents a significant program. Our street system is in good shape and this program will keep it that way. However, we have no mechanism outside of special assessments to upgrade streets. As we continue to grow and annex land that was once in the County, this problem will only get larger. One upgrade project (Two Mile Drive, Whitefish Stage, Appleway etc.) would wipe out this fund and prevent us from properly maintaining our street system. We have not budgeted any chip/seal or overlay work from the general street fund for FY/2001. URBAN RENEWAL PROJECTS The budget for the Downtown Urban Renewal District was submitted to you at the April 9`h workshop. The Downtown District budget reflects the many actions that you have taken in our workshop sessions. We have also included the projects that you have identified for the 2002 year. The bulk of the project money is allocated for the Downtown Streetscape project and expansion of City Hall complex over the remaining years. The Airport Urban Renewal District budget includes the sale of both Daley Field parcels, and you may not sell either parcel. If not, we may be able to borrow money against those parcels if you deem it appropriate to make the expenditures. Because we have not sold these lots and have yet to collect revenue from Dasen's project as per our contractual arrangement, we have frozen all spending in this district to include only items that are absolutely necessary. The budget for the Westside District does not anticipate additional increment dollars over the current year. Funds are set aside for the Meridian Road Project. With the debt retirement schedule associated with the Stream Project and the change in SB-184, we have also frozen any spending within the West side District. A LOOK TO FY/2002 While developing the current years budget, it is important to look forward to developing the next year's budget. Issues that will have to be considered are: 1. General fund money to meet police and fire contracts which will be up for negotiation next spring. In addition, the AFSCME contract is currently being negotiated. Based on gross wages for the General Fund of just over $3,000,000, a 3% increase would cost $90,000 plus related costs for retirement and worker's compensation. In all this it adds up to $100,000 + with fringe benefits. Since our revenues from gaming and other existing revenues are projected to be flat as a result of SB - 184, a change in the level of services, higher property taxes or the ability to find new revenue sources is inevitable. 2. I had hoped to set up a solid program for funding the replacement of general fund heavy equipment in this proposed budget. Budget restraints did not make this possible. We cannot ignore the fact that several millions of dollars is needed to replace equipment that has lived well past its life expectancy reducing efficiency and creating a drain on our City garage budget due to high repair cost. In order to present a balanced budget, several pieces of equipment were the last items to be cut from the proposed budget. 3. A health insurance committee has been formed to look at options for the City to consider regarding health insurance costs. This year the City's contribution will be the maximum provided in all Union contracts. 4. Kalispell is the only first class City in Montana not asking a franchise fee for cable television. Columbia Falls adopted a franchise fee of 5% in 1999 which is expected to raise $25,000 the first year and substantially more in years ahead as the Internet becomes part of the cable system. It is my estimate that Kalispell can raise approximately $40,000 to $50,000 from a similar fee. With the shortfall in other revenue sources, the City needs to explore this revenue source used by many Montana cities. 5. The actions of the Montana legislature seem to negatively impact the City each time they meet. Several reimbursement bills that have resulted from State cuts in local revenues are at the mercy of each legislative session. These reimbursements are beginning to become significant but can not be counted on with any level of certainty. The floating mill that resulted from SB-184 is making local governments take the political heat for the States lack of leadership. Local units of government must ban together to create alternative sources of revenue outside of property taxes and fees. Local option taxes must be seriously debated by the City Council, and if supported, we need to fight to have access to these funds. 6. Special Street Maintenance Assessments will need to be evaluated. Those rates have remained the same since 1995. 7. Funding for the Hwy 93 South utility project will need to be determined. Rates will need to be analyzed if Revenue Bonds are issued. xiv I would again like to thank Amy Robertson and Carol Kostman of the finance department, and each of the department directors for all of their hard work in this process. The City staff is prepared to meet with you to provide assistance in reviewing this budget. Once this document is adopted, it will provide the blueprint for delivering services to the City for Fiscal Year 2001. Respectfully submitted, Chris A. Kukulski City Manager ► IA