Beware the Ides of March! Third quarter projections, year-end preparation and passing the annual budget
Nick Hawkins, budget analyst in the Budget Office, describes the final stretch of the annual budget process.
Just as the month of March proved tumultuous for Julius Caesar and the Roman Empire, March is an equally tiring time for the City of Kansas City, though much less brutal.
March marks the end of a long and draining budget season, culminating in the adoption of the annual budget by the fourth Thursday. While the Finance Department works closely with the City Council on last minute changes, a separate, equally important process goes on—third quarter analysis and preparation for the year-end ordinance.
Departments, already weary from months of managing their current budget and prepping for the next budget cycle, can often be heard whispering, “Et tu, budget?” when year-end comes around. Third quarter analysis is the key driver in ensuring the City has the proper resources to meet all its obligations for the rest of the year and to start the next fiscal year on the right foot. Budget analysts look at prior data and projections, and work closely with other departments throughout February to accurately project where revenues and expenditures will fall on April 30.
In fiscal year 2014-15, third quarter projections varied 1.6 percent and 1.8 percent on actual expenditures and revenues in the General Fund, respectively. That variance is within the division’s performance target of 3 percent. The projections usually are presented to the Finance and Governance Committee in mid-March, with the information being used to update the adopted budget and prepare the year-end ordinance.
The year-end ordinance puts those projections into action. There are two main components to the ordinance: adjusting revenues and appropriations to meet current year obligations, and identifying money that will roll forward to the next fiscal year to meet obligations that extend past April 30.
For example, if at the adoption of the current year budget we projected sales tax revenues to be flat compared to prior years, but receipts come in at a higher rate, then revenue may be adjusted in the year-end ordinance to account for that growth. Likewise, if one department is struggling to meet current obligations and surplus funds are projected for another, then an adjustment may be made to appropriations to allow the struggling department to meet its obligations for the year.
March is a critical time for the Budget Office with many different interlocking pieces in play. Beginning with third quarter analysis and stretching all the way to adoption of the annual budget, analysts are more keen than Caesar to heed the advice of the soothsayer and beware the Ides of March!