By Nancy Huddleston, Editor

What do a TIF and CIP have to do with taxes citizens pay?

Everything when the Savage City Council starts working on next year’s budget. For instance, this year several TIF (Tax Increment Financing) districts will be retired. Although tax revenues from the districts have always been collected, when TIF districts are retired, those revenues are moved out of TIF funds into the general tax base.

“Now it will show up as new growth, but it is not, as it has always been there, just in a different fund,” explained City Administrator Barry Stock.

Finance Manager Shelly Kolling told the City Council during a Monday night (Aug. 11) work session that she is working on a more detailed report regarding how the retirement of the TIF districts will impact the overall city budget.

That information will be added to what the City Council has already considered in regards to the CIP (Capital Improvement Program). The CIP lays out major expenditures for the next five years. While not all of those expenditures may happen, it is a large component of the overall budget puzzle the city puts together each summer.

For instance, the CIP includes some big ticket items such $2 million in 2009 for a new fire station and relocating the Quentin Avenue fire station, $2 million in 2009, $4 million in 2010, $4 million in 2011 and $3 million in 2012 for the remaining phases of the Hamilton District street and utility improvements; $1.23 million in 2009 for the right of way for the Glenhurst/Chowen street connection; $1.5 million for the McQuiston Court street extension to CR 27 in 2009; and $1 million for the city’s share of the Kraemer Quarry Surface Water Treatment Plant in Burnsville in 2009.

Will these projects all take place as outlined on the CIP?

Maybe, explain city officials, because two of the main purposes of the CIP is to maintain projects financed through General Obligation bonds ($4 million annually) and to maintain equipment financed through bonds ($600,000 annually). So the projects are listed and worked into each year’s budget based on direction given by the City Council.

What’s more, the process of identifying major projects in the CIP only covers part of the process. The next step, Kolling said, is to review the projected impacts of the CIP and equipment purchases on the city’s debt.

Right now, the city’s debt service fund is sitting at $5 million and it is projected to go to $5.1 million for 2009.

What’s next?

The next budget work session is Monday, Aug. 25 the City Council will look at the general fund and the projected impacts for next year when it is factored into the other components of the 2009 budgeting process.

 Nancy Huddleston can be reached at editor@savagepacer.com.