Item #08
Date: March 5, 2024
To: Mayor and City Council
From: Jennifer Styczynski, Finance Director
Jim Schaad, City Manager
Subject: Budget Amendments to FY 2023-24 Adopted General Fund Budget Recommendation:
Pass a Motion to amend the FY 2023-24 adopted General Fund, Street Fund, and Wastewater Fund budgets with the proposed adjustments to revenue and expenditures as stated below.
Rationale for Recommendation:
Annually, staff commences a midyear review of revenues and expenditures to ensure the continued validity of the adopted budget. It also allows the City Council to achieve a more accurate budget for the current fiscal year, resulting in greater budget transparency, and to help shape the development of next year’s budget.
Background:
The City Council adopted the FY 2023-24 budget on June 20, 2023, and is required to maintain a balanced budget. City staff continually works to ensure that the City is not deficit spending. Therefore, sales tax (projected with the help of HdL), permits, and cannabis business tax forecasts were used to provide conservative financial projections given the continuing potential volatility of the economy. During the midyear review, staff found that property taxes and permits have continued to increase above original projections and that sales tax projections remain in line with initial forecasts. Therefore, staff recommends that the City Council authorize the amendment to the Adopted Budget for FY 2023-24 to incorporate the additional $542,500 ($350,000 operational and $192,000 one-time) in projected revenues.
The increased revenues are partially offset by increased expenditure. The City Council previously approved $136,247 in supplemental appropriations ($106,297 in operational costs and $29,950 in onetime costs). The majority were related to wage increases for bargaining unit and non-bargaining unit employees. Per review of current expenditures, an additional overall appropriation of $647,719 ($153,673 in operational costs and $494,046 in one-time costs) is recommended. The details and justification for this proposed change is explained in Attachment #1.
Discussion and Analysis:
The City staff recommends adding revenue budget adjustments of $542,500 to increase General Fund revenues and supplemental appropriations of $647,719 to increase General Fund expenditures. The Item #08
summary below gives an overview of the changes, and the attachment presents further detail on the amounts and a brief description of why the budget amendments are being requested.
Revenue
Adopted Operational Budget (less one-time revenues) $ 14,151,607 One-time Non-Recuring Revenue 1,685,200
Total Adopted Budget - Revenue $ 15,836,807
Approved Supplemental Appropriations (one-time grants) 29,950 Proposed Operational Increase 350,000
Proposed One-Time Increase 192,500
Revised Overall Revenue as of 12-31-23 $ 16,409,257
Expenditures
Adopted Operational Budget (less one-time expenditures) $ 13,434,749 One-time ARPA Expenditures 2,160,000
One-time Street Projects (Measure C) 3,700,000
One-time Expenditures and Grants 2,628,200
Total Adopted Budget - Expenditures $ 21,922,949
Approved Supplemental Appropriations (first half) $ 136,247 LPR Cameras from HSG Grant (one-time cost) 29,950
Labor negotiations for Teamsters (operational cost) 14,138 Labor negotiations for PD (operational cost) 92,159
Proposed Operational Expenditure (Appropriation) by Department $ 153,673 City Administration 4,200
Economic Sustainability 9,000
City Attorney 20,000
General Services 31,600
Fire (24,000)
Planning & Zoning 15,100
Building 29,000
Public Works & Engineering 24,000
Facilities & Parks 24,773
Community Sponsorship 20,000
Proposed One-time Expenditure (Appropriation) by Department $ 494,046 City Attorney 395,000
Human Resources (75,000)
General Services (32,654)
Police 20,000
Fire 87,200
Building 30,000
Facilities & Parks 69,500
Proposed Revised Operational Expenditures as of 12-31-23 $ 13,694,719 Proposed Revised One-Time Expenditures as of 12-31-23 $ 9,012,196 Revised Operational Revenue Less Expenditures as of 12-31-23 $ 806,888 Revised One-Time Revenue Less Expenditures as of 12-31-23 $ (7,104,546) Adopted Operational Budget (for reference) as of 7-1-23 $ 716,858 Adopted One-Time Budget (for reference) as of 7-1-23 $ (6,803,000) Item #08
The recommended changes to the Street Fund and Enterprise Fund are outlined in the attached detailed budget adjustment sheets.
Alignment with City Council Goals:
This Agenda Item aligns with current Council Goals as it updates the City’s fiscal projections to be more accurate and represent current fiscal expectations for FY 2023-24.
Fiscal Analysis:
The recommended adjustments to both General Fund revenue and expenditure budgets for FY 2023-24 allow for a continued balanced budget with revised operational revenue to expenditure variance of $806,888 and a revised one-time expenditure to revenue variance of $7,104,546. Note that this is not due to a structural deficit but due to planned one-time expenditures funded out of the City’s accumulated reserve. These one-time expenditures were primarily for street rehabilitations and other infrastructure improvements. The recommended adjustments to the Street Fund for FY 2023-24 propose a slight overall budget decrease of $14,644, while the Enterprise Fund is proposed to be a minimal increase of $3,258 after reviewing all accounts.
Attachments:
1. Detailed Recommended Budget Adjustments for the General Fund
2. Detailed Recommended Budget Adjustments for the Street Fund
3. Detailed Recommended Budget Adjustments for the Enterprise Fund
4. FY 2023-24 Financial Report