AgdaPkt 2005-01-24 - Laserfiche WebLink

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5.3A-)D REPORT 1. A~ \ To the Honorable Mayor and City Council From the City Manage . September 27, 2004 Subject FY 2004/05 General Fund Budget Recommendation It is recommended that the City Council: 1) after receiving input at a duly noticed public hearing, adopt a resolution implementing the Planning Cost Recovery Policy, and 2) introduce an ordirJance amending the FY 2004/05 general fund budget that reflects staff's recommendation to implement the Planning Cost Recovery Policy. The Council may also elect to include in this ordinance any of the proposed expenditure reductions presented in this report, but staff is not recommending any additional reductions at this time. Background At the 151 FY 2004/05 budget study session, the City Council directed the City Manager to return to Council no later than the end of September with a combination of $1 million in additional expenditure reductions and revenue increases to narrow the expected FY2004/05 general fund operating deficit. Further, Council directed that there be no further expenditure reductions in FY2004/05 to the City Clerk, Fire Department, or Police Department budgets. Since the City Council accepted the entire 15% reductions for the Human Resources and City Attorney departments, no further reductions are proposed for these departments in FY 2004/05. The general fund budget adopted for FY2004/05 projects $4.1 million in expenditures greater than revenues. The general fund's FY 2003/04 financial performance appears to be better than expected when the FY 2004/05 budget was prepared in the spring of 2004. Based on the preliminary, un-audited financial information available to us at the time this report was prepared, revenues and expenditures were close to being in balance in FY 2003104 which is much better than the $2.5 million operating deficit that was projected. Revenues were about $1.7 million or 2.9% higher than expected while expenditures were about $.6 million, or 1 % lower than expected (department heads anticipated the cuts for FY 2004/05 and held positions vacant in FY 2003/04, which led to the lower expenditures). If these results do not change during the upcoming audit, our ending fund balance reserves will not have declined to any significant extent during the past year. This is excellent news and may allow the Council to revisit the current reduction strategy. These results will not change at this time the projected revenue-expenditure imbalance (expenditures being forecast as greater than revenues) during the current year and future years. Staff will monitor revenues carefully during the next two quarters before making a new revenue forecast for FY 2005/06. After the Finance Department performs a thorough analysis of FY 2003/04 revenues and expenditures, we will be in a better position to explain the underlying causes of these variances.