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HomeMy WebLinkAboutFY25 Proposed Budget Overview for 2024 09 23 v3m (1)Fiscal Year 2025 Proposed Budget October 1, 2024 –September 30, 2025 September 23, 2024 1 Types of Funds •General Fund –Principal financial support for basic services in public safety,parks &recreation,and general government operations,etc. •Enterprise Fund –Provides direct deliverables to customers who receive goods or services in exchange for payment;self-sufficient, created to generate revenue to cover expenses;acts like a business •Special Fund –For a special purpose and disbursed only for the purpose for which it was created September 23, 2024 2 Budget Process Status •The City Manager has presented to council a balanced budget Highlights: •Increase of 8 authorized personnel in General Fund •Removed rate increase for Water and Sewer •Increase of 10%in projected costs for health insurance •Proposed 3%salary increase for all employees •Newly funded capital projects with the $19.625 million Certificate of Obligation majority is allocated to projects which council has (which is ineligible for water and sewer projects) •All transfers between funds are due to administration,debt obligation,and funding for internal and capital funds September 23, 2024 3 Council Adopted Financial Policy Requirements and Recommendations •General Fund maintains 60 days of operating costs as a fund balance plus $1.5million •Solid Waste has 45 days of operating costs as a fund balance •Pleasure Island has 60 days of operating costs as a fund balance •Water and Wastewater Fund has 0 days of fund balance September 23, 2024 4 Audit and Red Flags for Water and Sewer Fund •Negative Cash Flow –Expenditures exceed revenue (emergency repaircosts) •At end of September 2023,the previous director of finance provided areportthatshowedthatthewaterandsewerwasoperatinginanegativecashflow •At conclusion of FY22 audit,there was a negative cash flow in water andsewer •At conclusion of FY23 audit draft,there is a negative cash flow in water andsewer •At FY24 audit process near conclusion,there is not enough positive cashflowtomakeupforthe2yearsinarowofnegativecashflow •There is NO money available in the fund to handle emergencies in the FY25budget September 23, 2024 5 Impact of Expected deficit of Water and Sewer Fund •Any unexpected expenditures would require emergency appropriation and transfer from GENERAL fund •No new capital projects allowed for lack of funding •Rate increase for industry is a smaller amount of revenue and also the increase will not sustain the fund •Grants (cannot budget grants not received) September 23, 2024 6 Future Certificates of Obligation •As emergencies occur in water and sewer,the general fund balance will be used to subsidize water and sewer fund •Water and sewer fund management affects interest rates of future COBs affecting general capital projects •Without fresh and new sustained revenue,the water and sewer most likely will increase negative cash availability •General Fund ongoing subsidizing of Water and Sewer Fund will result in the loss of the current A+credit rating September 23, 2024 7 Re-cap and Conclusion •The budget as presented is in balance •Although the Water and Sewer Fund is in balance,the negative cash flow will continue •Unfortunately,there is no funding for system upgrades and repairs •Ongoing negative cash flow in the Water and Sewer Fund is a fiscally unsound policy •With the current rates,based on the prior discussion and direction of council,adoption of the balanced budget presented is recommended September 23, 2024 8