FIRST AND FINAL CONSIDERATION: Consideration of and action on CITY OF SUGAR LAND ORDINANCE NO. 2111 AN ORDINANCE AMENDING THE FISCAL YEAR 2016-2017 BUDGET FOR THE CITY OF SUGAR LAND, TEXAS, TO PROVIDE THAT THE REVISED BUDGET ADDRESS FUNDS RELATING TO CERTAIN CAPITAL AND OPERATING BUDGET MATTERS AND THAT THIS AMENDMENT BE ADOPTED AS THE BUDGETED AMOUNT FOR THOSE FUNDS. 

The Fiscal Year 2018 budget was filed on July 18, 2017 and included projections for FY17. The projections contained within this budget amendment do not include expenditures related to hurricane Harvey. The budget will need to be amended to incorporate the additional expense related to this event after proper accounting has been completed.

Based on the year-end projections, governmental operating funds are ending the year better than expected, with projected ending fund balances higher than anticipated in the FY17 adopted budget. Staff recommends that the budget for FY17 be amended to reflect the projections as reviewed with City Council during the budget workshops.

Benefits of amending the current year budget include adjusting revenue streams to reflect actual collections, as well as capturing savings in the estimated fund balance. Increases to fund balances are considered non-recurring funding sources and can be used to fund non-recurring expenditures in FY18 as outlined in the Financial Management Policy Statements (FMPS). Amending the budget helps to give a more accurate picture of the City’s financial position at year end.

A summary of the projections for the major operating funds is shown below:

The variance in revenues and expenditures contributing to the higher ending fund balances for the major operating funds are explained below:

General Fund

The net impact of revenue and expenditure projections results in the General Fund ending the year better than expected by $725,770. This is slightly less than presented in the proposed budget as a result of a true-up in the transfers out to other funds.

Revenues
The revenues in the General Fund are anticipated to be $2,214,880 less than budgeted. This is the result of declines in revenue from Sales Tax, Fines & Forfeitures, License & Permits, Other Revenue and Interest Income. These declines in revenue are the result of the slowing of the economy and are consistent with what has been presented to Council.

Expenditures
The expenditures in the General Fund are anticipated to end the year better than expected by $2,940,650 in savings. This is primarily a result of a reduction in transfers to the Capital Projects Fund.

Debt Service Fund

The net impact of revenue and expenditure projections results in the Debt Service Fund ending the year better than expected by $369,343. This a result of increased interest on investments, as well as result of the timing and the amount of new issues due to project savings.

Revenues
The revenues in the Debt Service Fund are anticipated to be $26,241 higher than budgeted. This is due to increases in the interest on investments, and refunding bond proceeds.

Expenditures
The expenditures in the Debt Service Fund are anticipated to end the year better than expected by $343,102. This is due to savings coming from the debt service payment.


Utility Fund

The net impact of revenue and expenditure projections results in the Utility Fund ending the year lower than expected by $718,079. This is the result of higher than expected rainfall. This results in lower operating revenues and operating expenditures. The primary changes within the Utility fund are reductions in non-operating revenues and non-operating expenditure associated with issuance of debt. Lower than expected projects costs allowed the debt issuance to be lower, and therefore non-operating revenues and expenditures are both lower.

Revenues
Water Utility revenues are projected to be $3,664,313 lower than budgeted. This is due to bond proceeds and water consumption being lower than anticipated due to higher rainfall this year compared to last year.

Expenditures
Expenditures in the Water Utility Fund are anticipated to be $2,946,233 lower than budgeted. The reduction in expenditures is due to lower debt service payments and lower transfers out. The transfer out to the Surface Water Fund is for the City’s GRP consumption. Based on water usage being lower than anticipated, the corresponding transfer out for the City’s Surface Water Fees will be lower. The transfer out to Utility CIP fund is $1,658,547 lower than budgeted.

Surface Water Fund

The net impact of revenue and expenditure projections results in the Surface Water Fund ending the year higher than expected by $185,714.

Revenues
Surface Water revenues are projected to be $555,684 lower than budgeted. This is due to a lower transfer in from the Water Utility Fund for City GRP consumption as well as lower out-of-city charges. The reduction is due to lower water consumption than anticipated due to higher than expected rainfall.

Expenditures
Expenditures in the Water Utility Fund are anticipated to be $741,398 lower than budgeted. The reduction in expenditures is due to an updated debt service.

Airport Fund

The net impact of revenue and expenditure projections result in the Airport ending the year higher than budgeted by $294,957. This is due to higher than anticipated fuel sales as a result of the Super Bowl impact.

Revenues
Revenues from the Airport Fund are anticipated to be $1,808,052 lower than budgeted. This is due to lower than anticipated fuel sales revenue as a result of the decrease in the market price of fuel.

Expenditures
Expenditures are projected to be $2,103,009 lower than budgeted. The decrease in expenditures is primarily driven by the lower market price of fuel.

Solid Waste Fund

The net impact of revenue and expenditure projections results in the Solid Waste Fund ending the year lower than expected by $6,053.

Revenues
Solid Waste revenues are projected to be $23,938 lower than budgeted. The reduction is due to lower solid waste collections.

Expenditures
Expenditures in the Solid Waste Fund are anticipated to be $17,885 lower than budgeted due to lower solid waste collections.


Sugar Land Development Corporation (SLDC)

The net impact of revenue and expenditure projections results in the SLDC ending the year better than expected by $465,969. This is the net result of changes in Sales Tax, Interest income, Miscellaneous Revenue, as well as an updated Economic Development Program and Economic Development Incentives.

Revenues
Revenues for SLDC are anticipated to be $53,500 higher than budgeted. This is due to an increase in miscellaneous revenue and reimbursements.

Expenditures
Expenditures for the SLDC are projected to be $412,469 lower than budgeted. The savings are from the transfer to General Fund, economic development operating expenses and direct incentives program. The corporation is expected to end FY17 with $465,969 more in fund balance than anticipated.

Sugar Land 4B Corporation (SL4B)

The net impact of the revenue and expenditure projection results in the SL4B Corporation ending the year lower than expected by $719,139. This is the result of Sales Tax revenue decline, as well as an increase in transfers to CIP fund.

Revenues
SL4B revenues are anticipated to be $269,139 lower than budgeted. This is the net result of higher interest income as well as the lower Sales Tax revenue.

Expenditures
Expenditures for the SL4B are anticipated to be $450,000 higher than budgeted. This is result of transfer to CIP fund.

Capital Project Fund

The net impact of the revenue and expenditure projection results in the Capital Project ending the year with $8,013,607 in fund balance. This is the net result of changes to PAYG projects, identified projects savings and new projects.

Revenues
Capital Project revenues are anticipated to be $9,001,620 lower than budgeted due to lower construction costs which resulted in the need to issue less in bonds, project savings, and a reduction to transfer from General Fund for PAYG projects.

Expenditures
Capital Project expenditures are anticipated to be $4,838,078 lower than budgeted. This is a result of PAYG reduction and project savings.

Staff recommends approval of Ordinance No. 2111 amending the FY17 budget.