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Balancing the General Fund Financial Forecast
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Submitted by:
John Ruggini
Department:
Finance
A. Issue
The City is facing a $6.0 million budget gap over the next five years of which $3.0 million occurs in 2025. As per the City's Financial Resiliency a plan for balancing the five-year forecast is presented below.
B. Background/Options
The 2025-2029 General Fund forecast was presented at the June 11, 2024 Financial Affairs Committee meeting and showed a $6.0 million gap as shown in figures 1 and 2 below.
Figure 1- Cumulative Gap
Figure 2- Annual Gap
Per the Financial Resiliency policy, recommendations for closing the gap are presented below.
2025 Budget Year
The City is facing one of the larger gaps in the last 10 years in 2025 due to numerous factors described in the June 11th memo. Given the size of the gap, and repeated budget reductions over the past 15 years, there are few good options. Staff are still developing the 2025 Budget so no final decisions have been made. However, to keep the committee informed per the Budget Process Policy adopted earlier this year, the options being considered are described below in Figure 3.
Figure 3
Given that the gap is larger in 2025 than 2026, one strategy is to push some of the gap into the subsequent budget year. This is accomplished by using remaining ARPA budget stabilization funds in 2025. As a one-time revenue, this has that effect. Since there is no way to commit these funds by 12/31/2024, this will be actualized by re-estimating $300,000 of ARPA funds into the police department budget to cover unbudgeted overtime in 2024 so that $300,000 of property tax revenue will be pushed into fund balance. This $300,000 of fund balance will be used in 2025.
The City earned $787,000 in prescription drug rebates in 2023 compared to the 2024 Budget of $617,795 so we believe we can increase this budget reducing the gap by $184,000.
The City Assessor is estimating that Net New Construction will b...
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