Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: 2 Year Budget Discussion
Date: February 22, 2022
Written by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council discuss moving to a 2 year budget and provide direction to Staff.
Background
At the strategic planning meeting on February 15, 2022, the City Council had a preliminary discussion about moving to a 2-year budget and indicated conceptual support for the concept.
Analysis/Discussion
Governments at state, regional and local levels use multi-year budgets. In Sonoma County, the Town of Windsor and City of Healdsburg use 2-year budgets. Considerations • Two, one-year budgets with quarterly financial updates. • Year-end update and adjustments (or as needed).
• Complemented by a rolling 5-year forecast.
• More efficient use of time to develop & publish budget, which can be spent on strategic goals.
• Encourages multi-year planning to achieve strategic goals and encourages greater stability and focus on goals.
• Important to clearly define strategic goals and projects to achieve those goals. • Important in any budget to avoid “mission creep” and divert resources from achieving multi-year strategic goals.
For Cotati, the recommended process for a 2-year budget would include the existing Strategic Planning meeting, followed by the existing series of at least two budget study workshops, a separate capital improvement plan approval, and budget adoption. During the two-year cycle, the process would including quarterly updates to the City Council, and scheduled review and adjustment of appropriations as needed prior to the new fiscal year. As is the current practice, if there are needs that require more immediate appropriations outside of this cycle, it would come forward as a separate item.
If the City Council desires to move forward with an initial 2-year budget, staff would begin work on the budget immediately and discuss it with the City Council and community at the upcoming Budget Study Workshops.
Financial Considerations
The creation of a multi-year budget is expected to save staff time over the budget cycle. In particular, creation of a full budget document takes significant time.
Generally, it is well known at budget time what capital projects are expected, and reasonable projections can be made of operating revenues and expenses. “New” work is typically ordinances, resolutions, or other community efforts in response to something in the community that was not anticipated. In some cases, this could require new contract work, but generally requires allocation of unplanned staff time. Depending on the time sensitivity of such work, it would be managed in the manner recently agreed upon by the City Council if new priorities come up. If new contract spending is necessary, this could be added as a new appropriation when the City Council agrees to proceed with the work.
Environmental Issues
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.