Background

The City’s budget is adopted by one reading of an ordinance each year by City Council as stipulated by the City Charter. After the budget is adopted, additional appropriations that are needed require City Council approval through a budget ordinance. To streamline the process, the Budget Office consolidates amendment requests into a single budget ordinance and brings them forward on a semi-annual basis, or as needed. This budget amendment is for carry-overs from FY2024.

FY24 Results Summary

The City ended FY24 above budgeted funding levels in all operating funds. The table below illustrates the results between FY24 unaudited results and the FY24 amended budget, as well as the impact to available funding after carryovers.

Fund Balance Policy Requirement

The balances shown above include the funds that are required to be maintained in accordance with the City’s Financial Management Policy Statements. The General Fund must maintain an unassigned fund balance of at least 25% or 3 months of normal recurring operating costs, based on current year budgeted expenditures.

A cash equivalent operating reserve is established and maintained for the Utility Fund at 25% of the current year’s budget appropriation for recurring operating costs, and the Airport Fund is also at 25%, excluding fuel for resale cost.

Carry-Over Requests

Carryovers are expenditures that were budgeted in the prior year, but the receipt of those goods did not occur until the current fiscal year. Because appropriations lapse at fiscal year-end, and funds may not be spent unless they are appropriated, Council must formally re-authorize the expenditure of these funds. In all major operating funds where carry-over funding is requested, the funds ended FY24 better than anticipated. The carry-over requests for each fund are outlined below.

General Fund

The General Fund accounts for most of the City’s services and is funded primarily from sales tax (42%) and property taxes (34%). The annual budget maintains a policy minimum of 25% of recurring operating expenditures as a fund balance requirement.

The General Fund FY24 ending fund balance of $44.85M is $4.00M greater than the budgeted ending fund balance (net of sales tax accruals). Sales tax revenues came in $0.50M better than the projected revised budget. A $2.62M is recommended for carry-over.

After carryovers the General Fund has a budgeted ending balance of $33,384,425, which maintains a 27% operating reserve and 2,498,773 in fund balance above the financial management policy requirement.

Utility Fund

At the end of FY24, the Utility Fund had an unaudited cash equivalents balance of $35.36 million which is $6.21 million higher than the budgeted ending balance. FY24 expenditures were $4.95 million less than budgeted and revenues came in higher by $1.26 million.

Carryover requests totaling $2,996,379 are recommended for the fund. This results in a revised budgeted ending balance of $38.07 million for FY25, which is over the 25% policy requirement.

The breakdown of utility carryovers by division is shown below:

Airport Fund

The Airport Fund ended FY24 with unaudited cash equivalents of $10.18 million, which is $0.53 million higher than the budgeted ending balance. Operating carry-over requests in the Airport Fund total $904,421. The revised budgeted ending balance for FY25 is $8.95 million after carryovers and is over the policy requirement.

The breakdown of the Airport operating carryovers by division is shown below:

Stormwater Fund

The Stormwater Compliance Fee Fund ended with an ending fund balance of $997,745, which is $682,603 higher than the projected budgeted ending balance. A total of $290,947 is recommended for carry-over, which transfers funding for contracts not completed in FY24.

High Tech Replacement Fund

The Technology Replacement Fund ended FY24 with a cash equivalent balance of $2.1 million which is $0.67 million higher than anticipated. A carryover of $151,926 is requested by the IT Department for equipment that was ordered but not received by year-end. The revised budgeted ending balance for FY25 will be $2.02M

Public Art Fund

The Public Art Fund was established in FY23 to track the funding of projects from various sources better. Of the $1.44 million in the FY24 final expenditure budget, a total of $0.43 million was spent, leaving a total of $1.01 million to be carried forward to continue on-going projects and maintain an allocation of available for FY25.

American Rescue Plan Act Fund (ARPA)

The ARPA ended FY24 with $3.87 million in unspent funding for projects. All of these funds have been committed to projects, as required by the federal guidelines, as of December 31, 2024. The remaining funds must be spent by December 31, 2026, and therefore all remaining funds are recommended for carry-over to FY25.

Opioid Litigation Settlement Fund

At the end of FY24, the Opioid Litigation Settlement Fund has an unaudited ending balance of $47,754, which is $20,596 higher than the FY24 budgeted ending balance. Any unspent balance will be carried over to FY25. This results in an additional appropriation of $20,596 added to the FY25 budget. The budgeted ending balance remains zero.

Debt Service Fund

The Debt Service Fund ended FY24 with a cash equivalent balance of $12.13 million, which is $0.44 million higher than anticipated due to higher interest earnings coupled with lower rebate payments. The fund has two carryovers totaling $9,700, which is for bond issuance costs and fiscal fees. The revised budgeted ending balance for FY25 is $12.44 million after carryovers and is $9.11M over the policy requirement.

Recommendation

Staff recommends approval of Ordinance No. 2367 amending the FY25 budget to reflect carryover funding from FY24.