The latest FY24 budget draft the council reviewed reflected a surplus in the General Fund of approximately $7,000, which included a $125,000 transfer from the Pension Rate Stabilization fund. Pension expenses have increased significantly this year, and this fund was established for this purpose.
Largely, the draft budget holds the line as the city has a number of complexities primarily around vacant and new staff, and it will take time to work through onboarding before we can determine a realistic steady state baseline. Establishing a baseline is critical before making any significant changes to structure or operations.
Several of the specific funds reflect a deficit as well. Streetlights, Stormwater, Landscape Maintenance (LMD), The Grove and the Geologic Hazard Abatement District (GHAD) all reflect deficits to some degree. For some of these (Streetlights, Stormwater), we will be repurposing gas tax revenues to cover eligible costs within these funds. For others (LMD, GHAD), we will be rebuilding the budget with the available funds as a constraint so we can assess what that level of service delivery will entail.
While the current General Fund budget for FY24 reflects a modest surplus of $7,000, a few items will add context to this figure. It does not include any impact of current contract negotiations with the city’s Miscellaneous employee group. Any increase in compensation will have an unfavorable impact on the General Fund. It also includes $40,000 of one-time spend related to technology projects that have not yet been identified and, therefore, will have a favorable impact to the General Fund once carved out. It includes additional fee revenue of $36,000 for user-generated charges, but it does not include any fees that may be earned for special events held in the city. Any fees earned from special events will have a favorable impact to the General Fund.
When the council approved the current year FY23 budget, it was done so with an approximate $127,000 deficit. Based on current projections, we will end FY23 with an operating surplus of approximately $408,000 – representing a favorable swing of $535,000. This is due to a combination of greater than expected revenues, staff vacancies and other savings.
Much of the discussion leading up to the current budget being adopted was around structural deficits, with negative projections for every year available going forward. Some have utilized this negative outlook as a way to support a narrative that taxes need to be increased. As we can see with the current fiscal year, this significant deficit did not materialize for a variety of reasons – calling into question prior predictions.
The council and city staff continue to assess where we may make strategic investments to increase operational efficiency, reduce costs and ensure that we are using the taxpayer dollar as effectively as possible.
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