by Scott Huizenga, Budget Officer
This month we continue our Budget 101 series by introducing the process toward submitting an annual budget to the City Council. Previously, we discussed the Citywide Business Plan. The City Council adopted the Citywide Business Plan in October. Next, the City Manager will present the FY 2017-18 Submitted Budget in February to the Mayor and the City Council. That makes December and January the busiest months of an already busy calendar for the Budget Office.
During the holidays, we are working to balance two budgets at once – next year and the current year. We are starting to wrap presents for next year’s budget. In doing so, we look at who’s been naughty and nice (from a financial perspective) in the current year.
In our current phase of budget development, we meet regularly with the City Manager and with departments to finalize plans for the next fiscal year that starts May 1. Our task is to balance a $1.5 billion budget that contains over 200 programs and services with hundreds of distinct revenue sources. Many of these revenue sources are dedicated to specific programs. Therefore, we must balance both the entire budget and dozens of programs within the budget.
Departments submit their budget requests in October. Department budget requests include existing programs, potential program expansion, performance indicators, and major program accomplishments. The City Manager and staff consider available resources, program performance, and relevance to the adopted objectives in the Citywide Business Plan. Department officials meet with the City Manager and budget staff in November to review department budget requests. Finally, staff balances the budget and programs in December and January – leading up to the budget submittal.
We balance the budget broadly in three categories: the General Fund, Special Revenue Funds, and Business-Type Activities. Each category represents about one third of the entire budget. The General Fund is the most flexible portion of the budget. The General Fund can be used for virtually any public service, although the City allocates about 75 percent to public safety services. Special Revenue Funds collectively compose a variety of taxes and fees that are dedicated to specific programs and services. Examples of dedicated special revenues include the property taxes for health services; sales taxes for capital improvements, parks and recreation, public transportation, and public safety; and restaurant and hotel taxes for tourism. Finally, business-type activities, often called “enterprise funds,” are the City’s aviation and water services departments. The City can use fees from airports, water, sewer, and flood control only for those specific purposes.
While the Budget Office balances next year’s budget, we also prepare the 2nd Quarter Analysis for presentation in early December. The Budget Office estimates how we will end the current year financially based on current and historical performance for all of the city’s revenues and expenses. This year’s 2nd Quarter Analysis heavily influences next year’s budget.
|Percentage difference of quarterly projections to FY 2015-16 Actuals|
|Category||1st Qtr (%)||2nd Qtr (%)||3rd Qtr (%)|
City ordinance requires the Budget Office to present quarterly analyses three times per year. The 1st Quarter Analysis this year projected a General Fund deficit of $13.3 million. We intend to close this gap through the remainder of the fiscal year with a combination of hiring freezes and spending reductions. We expect the 2nd Quarter Analysis to show a vast improvement in the city’s current year position.
The Budget Office measures itself on the accuracy of its quarterly projections with targets to project within three percent of actual results. Thus far, the Budget Office exceeded these targets in all three quarters of the most recent fiscal year.
While parts of the city get some much-deserved downtime over the holidays, Budget Office is just warming up. It’s a frantic time on the 3rd floor of City Hall. In the end, we try to deliver more holiday cheer than lumps of coal.