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HomeMy WebLinkAboutItem 4.02 BudgModifArticleXIIIB CITY CLERK File #330-20 AGENDA STATEMENT CITY COUNCIL MEETING DATE: June 24, 2002 SUBJECT: 2001-2002 Budget Modification with Regard to Article XIII B of the State Constitution (Prepared by: Carole A. Perry, Administrative Services Director) ATTACHMENTS: None RECOMMENDATION: /n ~Authorize appropriations to Reserves, any revenues in excess of /<t~{~/~'~ budgeted expenditures as of June 30, 2002, as outlined below. % FINANCIAL STATEMENT: The action will provide appropriations to Reserves in the amount of any revenues received that are in excess of expenditures. The action will not change the amounts authorized for expenditure. Actual amounts appropriated to Reserves in each Fund will be identified after the books are closed and all accruals recorded. DESCRIPTION: This action requests authorization to "appropriate" all revenues received in the current Fiscal Year 2001-2002 that are in excess of expenditures. The actual amounts involved will be determined following the close of Fiscal Year 2001-2002. Each year the City Council takes this action to protect the ability to utilize these reserves in future years, without the risk of exceeding the State mandated Appropriations Limit. The State Constitution establishes a limit on the amount of annual appropriations that can legally be made from "Proceeds of Taxes." Although the City is currently well beloW the maximum Appropriations Limit, this action will protect future expenditures from Reserves. Under State Law certain funds can be excluded from the calculation of the total "appropriations" which will be subject to the Limit. The law specifically excludes funds that have been "appropriated" to Reserves in a prior fiscal year. When the Reserve Funds are eventually used, they are not subject to the Appropriations Limit in the year utilized, since they were previously "appropriated" under the Limit authorized in a prior year. In other words, if the City Council appropriated $500,000 to Reserves in Fiscal Year 2001-2002 and the funds were used on a capital project in Fiscal Year 2003-2004, this expenditure would not be subject to the Limit. At the time of the adoption of the Fiscal Year 2001-2002 budget, the City Council directed Staff to allocate an estimated year-end surplus of $4,130,839 to Reserves. The Reserves were earmarked for Downtown Improvements/Open Space, Affordable Housing, Energy Projects and Economic Uncertainty. As part of the development of the Fiscal Year 2002-2003 Preliminary Budget, Staff has revised the revenue and expenditure estimates for Fiscal Year 2001-2002. Those revised estimates project that the City's 2001-2002 year-end surplus (excluding the carry-over of approximately $6.2 million dollars in COPIES TO: F/budget/02-03/ExcessRevtoReservAGENDASTMT02-03_FINAL.DOC ITEM NO. ~ Capital Improvement Projects - CIPs) wilt be less than anticipated in the Preliminary Budget. This is due in part to lower than expected revenues collected for sales tax, engineering plan check fees (related to development), and building permit fees. In addition, a reserve has been set aside (see below) to address the proposed CIP carry-overs for Fiscal Year 2002-2003. The City has a number of projects in progress that will require additional contributions from the General Fund in the future. Should Staff's revised estimates materialize when the Fiscal Year 2001-2002 books are closed, Staff would recommend that Council consider the following additions or reductions. If the surplus exceeds Staff's estimate, Staff would recommend that the additional amOunts be allocated to the Reserve for Economic Uncertainty. RECOMMENDED YEAR-END SURPLUS ALLOCATION Previously Recommended Authorized Additions Additions/Reductions to Reserves in to Reserves in PROJECT' FY2001/2002 FY2001/2002 Total FY2001/2002 Downtown Improvements/ $1,000,000 ($373,640) $ 626,360 Open Space Affordable Housing $1,000,000 ($373,640) $ 626,360 Energy Projects $ 750,000 ($34,219) $ 715,781 Economic Uncertainty $1,380,839 ($1,380,839) $ 0 Capital Project Carryovers $ 0 $6,206,475 $6,206,475 TOTALS: $4,130,839 $4,044,137 $8,174,976 Staff recommends that the City Council authorize the appropriation of all excess revenues to Reserves in conformance with this report.