HomeMy WebLinkAboutFY25 Proposed Budget Overview for 2024 09 23 v3m (2)Fiscal Year 2025
Proposed Budget
October 1, 2024 – September 30, 2025
September 23, 2024
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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
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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
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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
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Audit and Red Flags for Water and Sewer Fund
Negative Cash Flow – Expenditures exceed revenue (emergency repair costs)
At end of September 2023, the previous director of finance provided a report that showed that the water and sewer was operating in a negative cash flow
At conclusion of FY22 audit, there was a negative cash flow in water and sewer
At conclusion of FY23 audit draft, there is a negative cash flow in water and sewer
At FY24 audit process near conclusion, there is not enough positive cash flow to make up for the 2 years in a row of negative cash flow
There is NO money available in the fund to handle emergencies in the FY25 budget
September 23, 2024
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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
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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
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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
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