Happy New (Fiscal) Year: A last look at FY 2017 – and Peeking Ahead

Happy New (Fiscal) Year: A last look at FY 2017 – and peeking ahead

Scott Huizenga, Budget Officer discusses peeking ahead after the City’s adoption of Fiscal Year 2017-18 Budget.

Happy new year! The City’s Fiscal Year 2016-17 ended on April 30. The Finance Department will spend the next several months on the Comprehensive Financial Annual Report (CAFR), otherwise known as “the audit.” While we will not know the official results of 2017 for several months, the Budget Office’s Third Quarter Budget Report and presentation provided some insight.

The Third Quarter Report projected a General Fund surplus of nearly $3.3 million. One of the big reasons for this good news is the City’s Earnings Tax (E-Tax). The 1 percent tax on wages and profits is projected to increase by $18 million per year in the last three years. The Earnings Tax is the largest non-utility revenue source for the City. So, even small changes in the rate of growth can have large impacts to the City’s bottom line.

The recent good news forecast continues several years of growth in the City’s reserve levels. The City’s fund balance policy mandates at least a reserve level of two months of operating expenditures. The City’s reserves have climbed over 200 percent since the Great Recession. The projected reserve level may top $70 million by the end of next year – up from $27.5 million 10 years ago.

More good news for City revenue is in the City’s hotel/motel tax and restaurant tax collections. They say people are eating out and traveling more than ever before. And, revenue collections appear to bear that out. Combined revenues from these activities and city conventions net projected surplus of $3.5 million to the City’s conventions and tourism fund.

Moving forward, a new fiscal year means the start of a new planning and budget cycle. Each year, the Citywide Business Plan sets the agenda for the annual budget to follow. The City will begin this year by reviewing trends from the prior fiscal year. At three Council Business Sessions in May and June, the full City Council will hear a year-end review of the city’s finances, citizen satisfaction, and performance. On May 25, Finance Department staff will give the City Council some context for the City’s financial position and how the City is achieving its financial strategic objectives contained in the Citywide Business Plan. Then, on June 8, the Office of Performance Management will present the 2016-17 Citizen Survey results. The Citizen Survey is one of the main tools the City uses to prioritize programs and services for the next business plan and the annual budget. Finally, on June 15, the Office of Performance Management will provide a year-end summary of KCStat and how the program relates to the city’s broader goals and objectives.

Contrary to popular belief, the end of “budget season” does not constitute down time for the Budget Office and the rest of the Finance Department. When one budget ends, the next almost immediately follows. We start with review and planning. The next budget will be here before we know it.