HomeMy WebLinkAbout08/15/2016 02 Mid-year 2016 Budget Status Report '1101Pi" 10
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 2.
For Meeting of: August 15, 2016
ITEM TITLE: Mid -year 2016 Budget Status Report
SUBMITTED BY: Cliff Moore, City Manager
Cindy Epperson, Director of Finance & Budget
SUMMARY EXPLANATION:
As part of the 2013 Strategic Plan, the City Council implemented a Financial Trend Monitoring
System (FTMS) in order to provide a more simple "performance at a glance" of budgetary and
revenue trends. The FTMS compares key financial and economic indicators as an early warning
system regarding the financial and economic health of the City, and assigns "positive ", "normal ",
"warning ", and "negative" labels to revenues and expenditures.
As described in the updated Five -Year Financial Plan presented to Council on February 23rd,
2016, both Sales Tax and Utility Taxes did not come in as budgeted in 2015, which resulted in an
overstatement of revenue estimates in 2016, as well. At the April 5th meeting, Council approved
a plan to reduce expenditures by about $750,000, the estimated amount of the revenue
overstatement.
At the end of the second quarter 2016, we are seeing typical variances tied to timing - -such as
annual premiums, dues /assessments. All expenditure categories received a "normal" ranking, as
actual results are within 5% of expected levels at this point in time. Sales Tax and Utility Tax
categories in General Government are receiving a "warning" designation, as these major revenue
sources are not expected to reach the budget. No categories received a "negative" designation.
As part of developing the 2017 budget, the 2016 actual results are being compared to budget
and new year -end estimates are developed. This accomplishes two purposes — the ending fund
balance (which then becomes the beginning 2017 fund balance) is calculated based on these
estimates; and we can identify areas that will require an appropriation. Examples of items
needing additional appropriation may include new grant awards, snow plowing events and
retirement cashouts. We expect to come to Council for the first reading of an appropriation in late
September or October.
We are currently in the stage of budget development where division managers are turning in their
budget estimates for 2016 year -end, and 2017. Copies of the City Manager's budget guidance
and the Finance Departments more detailed "how to" directions are attached for review. Finance
will start reviewing these submissions in the very near future. Given the challenges we identified in
the Five -Year Financial Plan, and preliminary revenue estimates that aren't significantly changing,
management is continuing the restraints on spending. We expect General Government to break
even in 2016, however, we entered 2016 with a fund balance of $7.2 million which is about $4.9
million below the recommended level of 16.7% of expenditures or $12.1 million. In order to
maintain our improved credit rating, we should be committed to increasing our fund balance at a
moderate rate over the coming 3 -5 year period to allow us to get closer to our 16.7% policy and
demonstrate we are addressing the deficiency.
Because of the inflationary increases in the base program budgets (i.e. labor settlements, utility
costs, etc.), we are not building in any Strategic Initiatives in General Government funds, unless
they are balanced by either other expenditure reductions or new revenue. I n other words, we will
not add any new programs until we see if the revenue can support it. Other operating funds may
have budgeted Strategic Initiatives if their dedicated revenues warrant. All Strategic Initiatives will
be a topic of discussion when Departments review their budgets at the Council Study Sessions in
early November. At this point in time, our analysis is that it will be unlikely that we would
recommend any significant new initiatives that do not come with revenue.
Overall, citywide first quarter results are as anticipated. Because of the slowdown identified
earlier in the year in utility and sales tax revenues, management initiated cost containment
measures in General Government funds which will extend at least through the end of the year, and
potentially into 2017 depending on revenue estimates.
ITEM BUDGETED: NA
STRATEGIC PRIORITY: Public Trust and Accountability
APPROVED FOR
SUBMITTAL: City Manager
STAFF RECOMMENDATION:
Accept Report
BOARD /COMMITTEE RECOMMENDATION:
ATTACHMENTS:
Description Upload Date Type
DI Mid year 2016 Irpn dgfA re pat t 8/ 10/ 01 G G:'Adver Memo
L`a'ity Manager 2017 If.: npdgk G. uin.G pllliirn ps 8/10/2016 G:'Adver Memo
DI Finance rnce IC::a&plrpG 2017 If.: npn.Ga. pG G. nplin.G pllliirn ps 8/10/2016 1Ga /?Gala G:'Adver Memo
MEMORANDUM
August 11, 2016
TO: The Honorable Mayor and
Members of the City Council
FROM: Cliff Moore, City Manager
Cindy Epperson, Director of Finance & Budget
SUBJECT: 2016 2nd Quarter Financial Trend Monitoring Report
We are submitting for your review the City of Yakima's 2016 2nd Quarter actual compared to
budgeted Revenue and Expenditure Report for all city funds.
Overall, the City budget is performing as expected.
This report is summarized by type of fund, and incorporates the Financial Monitoring System
presentation. Information is reported by functional type, in the following order:
➢ Performance at a Glance - Financial Monitoring System
➢ City -Wide Overview
➢ General Government Revenue Analysis
➢ General Government Expenditure Analysis
➢ Other Funds Analysis
➢ Top 10 Capital Project List
➢ Exhibits - Fund detail that supports the summaries:
• Exhibit I - Other Operating /Enterprise Funds
• Exhibit II - Capital Improvement Funds
• Exhibit III - Reserve and Other Funds
• Exhibit IV - Bond Redemption Funds
PERFORMANCE AT A GLANCE
STATUS PAGE
General Fund
Revenues NORMAL 2 - 5
Expenditures NORMAL 2 / 6 - 7
Other Funds NORMAL 8 -9
Top 10 Capital Projects NORMAL 10
Exhibits
Operating /Enterprise Funds (1) NORMAL 11
Capital Funds (1) NORMAL 12
Reserve, Trust & Agency Funds (1) NORMAL 13
Bond Redemption Funds (1) NORMAL 14
Legend:
Revenues exceed budget >5 %, Expenditures below budget >5% POSITIVE
Revenues exceed budget <5%, Expenditures below budget <5 %, NORMAL
Revenues below budget between 3 -5% WARNING
Revenues below budget >5% NEGATIVE
(1) These funds are graded on a Net Revenue measurement.
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CITY WIDE OVERVIEW
REVENUE COMPARISON
(Budget vs. Actual)
2015 2016
Percent Amended Percent
Actual Rec'd Budget Actual Rec'd
General $ 30,121,613 49.1% $ 62,702,510 $ 31,670,814 50.5%
Parks and Recreation 2,718,209 49.8% 5,510,965 2,720,189 49.4%
Street & Traffic Operations 2,539,208 53 5,059,850 2,581,822 51.0%
General Government Subtotal 35,379,030 49.5% 73,273,325 36,972,825 50.5%
Operating /Enterprise Funds 32,511,089 44.9% 72,583,371 33,261,209 45.8%
Capital Funds 6,947,240 16.3% 46,644,571 11,730,420 25.1%
G.O. Bond Redemption Funds 2,877,480 60.7% 4,815,142 2,990,938 62.1%
Utility Revenue Bond Redemption Funds 1,549,505 36.3% 2,131,180 1,064,626 50.0%
Employee Benefit Reserves 6,046,520 48.3% 13,120,340 6,462,669 49.3%
Operating Reserves 3,212,786 87.2% 4,894,000 3,470,130 70.9%
Trust and Agency Funds 639,339 103.1% 626,777 668,934 106.7%
Total $ 89,162,989 43.1% $ 218,088,706 $ 96,621,751 44.3%
EXPENDITURE COMPARISON
(Budget vs. Actual)
2015 2016
Percent Amended Percent
Actual Spent Budget Actual Spent
General $ 30,840,297 50.1% $ 62,702,391 $ 31,770,032 50.7%
Parks and Recreation 2,610,280 47.0% 5,468,072 2,756,378 50.4%
Street & Traffic Operations 2,344,960 46.1% 5,090,088 3,023,568 59.4%
General Government Subtotal 35,795,537 49.5% 73,260,551 37,549,978 51.3%
Operating/Enterprise Funds 34,320,177 42.6% 73,893,343 33,831,594 45.8%
Capital Funds 5,864,923 12.9% 57,879,417 9,272,194 16.0%
G.O. Bond Redemption Funds 2,652,539 55.1% 4,808,964 2,805,290 58.3%
Utility Revenue Bond Redemption Funds 348,577 16.3% 2,129,054 327,027 15.4%
Employee Benefit Reserves 6,464,216 50.2% 13,398,134 6,529,683 48.7%
Operating Reserves 2,758,395 74.2% 4,901,505 4,152,888 84.7%
Trust and Agency Funds 472,440 76.5% 617,777 254,797 41.2%
Total $ 88,676,804 39.9% $230,888,745 $ 94,723,451 41.0%
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GENERAL GOVERNMENT REVENUE ANALYSIS
GENERAL GOVERNMENT REVENUES
2016
Revenues through 6/30 Amended Percent
2014 2015 2016 Budget Receipted Status
General Sales Tax $ 7,236,681 $ 7,520,655 $ 7,748,857 $16,650,400 46.5% WARNING
Crirn. Justice Sales Tax 1,496,667 1,567,934 1,572,683 3,361,500 46.8% NORMAL
Property Tax 8,789,196 9,123,719 9,354,129 16,653,030 56.2% NORMAL
Utility & Franchise Taxes 8,123,940 7,688,398 7,738,356 16,278,300 47.5% WARNING
Charges for Services 3,252,345 4,055,352 4,580,059 8,718,028 52.5% NORMAL
State Shared Revenue 1,462,966 1,345,709 1,508,625 3,001,800 50.3% NORMAL
Other Intergovernmental 700,272 943,918 822,651 1,705,237 48.2% NORMAL
Fines and Forfeitures 765,276 837,683 876,779 1,707,110 51.4% NORMAL
Other Taxes 962,810 909,565 858,538 1,535,000 55.9% NORMAL
Transfers from other Funds 648,986 639,855 629,797 1,450,000 43.4% NORMAL
Licenses and Permits 373,827 413,128 509,108 916,470 55.6% NORMAL
Other Revenue 316,627 333,114 773,243 1,296,450 59.6% NORMAL
Total Revenue 34,129,593 35,379,030 36,972,825 73,273,325 50.5% NORMAL
Beginning Fund Balance 10,883,753 9,412,400 7,152,826 7,152,826
Total Resources $45,013,346 $44,791,430 $ 44,125,651 $80,426,151 54.9% NORMAL
Sales Tax - As reported in the Five -Year Financial Plan that went to Council on February 23, 2016, Sales Tax
dropped below prior year actual for the last 3 months of 2015, attributed primarily to the drought putting a
damper on spending in the region. Through the first quarter of 2016, sales tax was still running slightly
below the prior year, although there has been a positive trend for April through July, so that through the
seven months ending in July, we are 2.9% ahead of 2015 year to date for the same time period. The
downturn was noted and addressed in a report of Budget Reductions that went to Council on April 5, 2016.
The modified budget estimate was $16,271,000 -- $379,400 or 2.3% below the budgeted $16,650,400, and the
new estimate being used for the 2016 budget estimate is revised upward to $16,364,000 - still below the
original budget, which is why this category received a "warning" designation, but only by $286,400. The
new estimate is 3.8% above 2015 actual. The 2015 actual was only 2.9% higher than the full year of 2014,
after 3 consecutive years of 6.4% and higher growth rates in the years 2012 -2014. Since our economy is
closely tied to the agricultural sector, the wet winter eliminated the threat of extreme drought, and the four
recent sales tax receipts (i.e. April through July) would indicate an upturn in the economy. In looking at 1st
and 2nd quarter data from the Employment Security Department, year -over -year job growth was 2.6% and
2.4% respectively - -in comparison, the 3 and 4th quarters of 2015 experienced year -over -year job growth of
only 1.1% in each quarter. This job growth preliminarily indicates an upturn in the underlying economy.
Building Permit activity is staying strong, and this is a pre - cursor to construction sales tax. Looking at these
underlying economic factors, this revenue appears to be on target to meet the reduced budget estimate by
year end.
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Property Tax — The first half of the Property Tax assessment is due to the Yakima County Treasurer by
April 30, and the second half is due October 31. Therefore, the second quarter receipts are typically slightly
more than 50% of the annual budget, because of accounts that are paid in full in April and payments in full
when property sells. The budget is set based on assumptions of new construction and collection rates —the
2016 actual levy was very close to the levy assumptions made, so this major revenue should meet or slightly
exceed budget, depending on collection rate.
Utility and Franchise Taxes — After falling off in 2015, this category is experiencing 0.65% growth over the
prior year at the end of the 2nd quarter, and is below the 50% mark through this time frame. Contributing
factors for this category includes weather conditions through the first six months of the year. Natural gas
use does slow down for the rest of the year, but water related utilities go up through the summer months,
as well as higher activity in strong waste producing operations (i.e. fruit processing) so this category overall
is expected to end about $330,000 below budgeted amounts by year end, still in line with the estimate made
in the most recent Five -Year Financial Plan. This reduced estimate, coupled with the lowered sales tax
estimate comprises most of the total reduction in revenue estimates that necessitated the mid -year budget
reductions.
Charges for Services — Some accounts in this category are collected ratably throughout the year, while some
are seasonal in nature, such as the Parks and Recreation programs and Engineering /Construction
Inspection. Therefore, the slightly positive variance is a timing difference, and considered normal.
Other Intergovernmental — The SAFER (i.e. firefighter hiring) grant is only billed annually at the end of the
year, so the negative variance for this category is a timing difference, and considered normal.
Other Taxes — This category consists primarily of Business Licenses and Gambling Taxes. Business licenses
are due in January for the year, so that about 63% of this one category has been collected by June 30. It is
below prior year actual, because the bills went out earlier in December, and some of this revenue was
posted at the end of 2015. We anticipate the timing of the billing to continue at the earlier time, so that the
positive variance is a timing difference, and considered normal. Gambling Taxes are performing as
expected.
Other Revenue — This category consists primarily of interest earnings, concession revenue and sale of
assets. Most concessions activate in the summer, and the sale of one of the four Tiger Mart properties was
completed in the 2 quarter for an amount that approximated the budget. Therefore, this positive variance
is a timing difference, and considered normal.
Other categories all contain timing exceptions, and are still expected to meet the budget. Overall, general
government revenues are up by about $1,594,000 or 4.5% over 2015, and we anticipate year end to meet the
revenue budget within the 3% range which maintains the "normal" ranking. If the one time revenue tied to
the sale of a Tiger Mart property is removed, revenue is up approximately $1,190,000 or 3.4 %. We are not
experiencing a large increase in any revenue category, so the budget constraints are still necessary to
balance 2016.
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GENERAL GOVERNMENT REVENUES - By Month
2014 2015 2016
Jan $ 4,775,515 $ 4,516,085 $ 5,041,214
Feb 4,770,901 4,721,588 5,025,995
Mar 4,984,701 5,504,709 4,977,454
Apr 10,717,557 11,330,918 11,269,682
May 4,573,329 4,855,486 5,909,109
Jun 4,307,587 4,259,390 4,749,373
Jul 4,304,052 4,604,158 -
Aug 4,290,971 4,636,646 -
Sep 5,180,804 5,084,171 -
Oct 9,891,373 10,623,480 -
Nov 4,395,161 4,782,114 -
Dec 5,190,725 5,348,293 -
$67,382,676 $70,267,038 $36,972,827
$12,500,000
$10,000,000
• 2014
$7,500,000
$5,000,000 - • 2015
$2,500,000
$_ • 2016
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
GENERAL GOVERNMENT REVENUES - Cumulative By Month
2014 2015 2016
Jan $ 4,775,515 $ 4,516,085 $ 5,041,214
Feb 9,546,416 9,237,673 10,067,209
Mar 14,531,117 14,742,382 15,044,663
Apr 25,248,674 26,073,300 26,314,345
May 29,822,003 30,928,786 32,223,454
Jun 34,129,590 35,188,176 36,972,827
Jul 38,433,642 39,792,334 -
Aug 42,724,613 44,428,980
Sep 47,905,417 49,513,151 -
Oct 57,796,790 60,136,631 -
Nov 62,191,951 64,918,745 -
Dec 67,382,676 70,267,038 -
$80,000,000
$60,000,000 • 2014
$40,000,000
• 2015
$20,000,000
$- ... MI III P 2016
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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GENERAL FUND EXPENDITURE ANALYSIS
GENERAL GOVERNMENT EXPENDITURES
2016
Expenditures through 6/30 Amended Percent
2014 2015 2016 Budget Spent Status
Police $12,982,772 $13,203,992 $13,576,342 $27,178,683 50.0% NORMAL
Fire 5,212,980 6,067,545 6,010,719 12,310,596 48.8% NORMAL
Transfers To Other Funds 1,265,088 2,250,589 2,846,137 4,839,545 58.8% NORMAL
Information Technology 1,512,453 1,724,150 1,618,704 3,113,902 52.0% NORMAL
Code Administration 1,859,643 778,314 880,107 1,839,575 47.8% NORMAL
Utility Services 759,079 783,411 819,471 1,691,074 48.5% NORMAL
Legal 619,742 738,787 741,645 1,645,037 45.1% NORMAL
Financial Services 687,313 804,526 744,702 1,529,538 48.7% NORMAL
Municipal Court 604,553 626,783 674,797 1,427,119 47.3% NORMAL
Police Pension 640,315 570,208 493,074 1,104,060 44.7% NORMAL
Indigent Defense 336,713 454,335 469,446 935,500 50.2% NORMAL
Economic Development 306,569 412,236 399,033 888,891 44.9% NORMAL
Engineering 394,088 388,494 336,463 833,710 40.4% NORMAL
Planning 280,687 256,367 299,430 652,548 45.9% NORMAL
Records / City Clerk 245,038 331,982 406,469 652,086 62.3% NORMAL
Human Resources 291,149 306,444 307,652 648,774 47.4% NORMAL
Purchasing 220,940 303,307 307,537 630,092 48.8% NORMAL
City Hall Facility 270,835 307,868 304,478 505,447 60.2% NORMAL
City Manager 187,762 208,883 236,922 418,138 56.7% NORMAL
City Council 171,443 165,447 164,434 285,340 57.6% NORMAL
Neighborhood Partnerships - - - 206,735 n/a NORMAL
Intergovernmental 198,030 87,596 94,739 189,551 50.0% NORMAL
State Examiner - 4,209 587 113,000 0.5% NORMAL
Gang Free Initiative 73,870 64,824 37,144 148,450 n/a NORMAL
Position Vacancy Savings - - - (1,085,000) 0.0%
Total General Fund 29,121,062 30,840,297 31,770,032 62,702,391 50.7% I NORMAL
Parks & Recreation Fund 2,146,848 2,610,280 2,756,378 5,468,072 50.4% NORMAL
Street & Traffic Ops. 2,681,439 2,344,960 3,023,568 5,090,088 59.4% NORMAL
Total General Government $33,949,349 $35,795,537 $37,549,978 $73,260,551 51.3% NORMAL
Total General Government Fund Expenditures - 1.3% Above 50% NORMAL
Note: The "normal" designation is comparing to the budget after the budget reduction proposals are removed.
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SIGNIFICANT EXPENDITURE VARIANCES
Some operations in the General Government area have seasonal expenditures, which result in either
positive or negative timing variances through the second quarter. For example, the entire contribution to
the Risk Management fund is made in the first half of the year, because the corresponding purchased
insurance premiums are due at the beginning of the year. Conversely, Parks and Recreation and Economic
Development have lower program activity in the first half of the year, and pick up through the end of the
year. However, since the total General Government budget is about 69% salaries many variances are tied to
personnel — i.e. position vacancies.
The following explains why some areas are receiving a Normal designation even though they may be
over /under 25% in first quarter, yet comparable to prior years —i.e. payment timing variance
➢ Transfers to Other Funds — The annual principal payment on the 2014 street bond issue is due in the
second quarter, which put this category slightly over 50 %.
➢ Information Technology — Annual maintenance for various computer software systems, including
the annual YAKCORPS assessment, is paid in the first half of the year.
➢ Legal — This savings is the result of the City Attorney being paid out of the City Manager's budget
as interim City Manager. Also, the Community Court program that was going to start in early 2016
was postponed in the budget reduction activity.
➢ Records /City Clerk — Prior year election costs of $214,000 were paid in the first quarter.
➢ City Hall Maintenance — Semi -annual transfer to Risk Management Fund to pay for property
insurance is made in the first half of the year - $139,000.
➢ City Manager — One -time recruiting expenses for the new City Manager, along with the employee
survey are included in the year -to -date figures.
➢ City Council — Annual Association of Washington Cities (AWC) dues of $64,600 paid in the first
quarter.
➢ Neighborhood Partnerships — This is a new program that was postponed in the April budget
reduction report due to the slow down of sales tax revenue.
➢ State Examiner — The annual audit does not get under way until the end of the 2 quarter.
➢ Street and Traffic Operations — There was a snow event in the 1st quarter that required overtime
and outside contractors to plow. It is likely that an appropriation will be necessary, which will be
brought to Council after we start to develop the 2017 budget and review 2016 results in late
September.
Position Vacancy Savings — Shown for fund total purposes only — no "actual" will be charged here.
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OTHER FUNDS ANALYSIS
OTHER FUNDS REVENUES
2016
Revenues through 6/30 Amended Percent
2014 2015 2016 Budget Recd Status
Operating /Enterprise Funds $ 31,826,425 $ 32,511,089 $ 33,261,209 $ 72,583,371 45.8% NORMAL
Capital Funds 27,083,556 6,947,240 11,730,420 46,644,571 25.1% NORMAL
Reserve, Trust & Agency Funds 9,137,164 9,898,645 10,601,733 18,641,117 56.9% NORMAL
Bond Redemption Funds 2,425,724 4,426,985 4,055,564 6,946,322 58.4% NORMAL
Total Revenue 70,472,869 53,783,959 59,648,926 144,815,381 41.2% NORMAL
Beginning Fund Balance 51,645,155 51,022,832 61,807,854 61,807,854
Total Resources $122,118,024 $104,806,791 $121,456,780 $206,623,235 58.8% I NORMAL
OTHER FUNDS EXPENDITURES
2016
Expenditures through 6130 Amended Percent
2014 2015 2016 Budget Rec'd Status
Operating/Enterprise Funds $ 30,465,242 $ 34,320,177 $ 33,831,594 $ 73,893,343 45.8% NORMAL
Capital Funds 16,410,223 5,864,923 9,272,194 57,879,417 16.0% NORMAL
Reserve, Trust & Agency Funds 8,701,979 9,695,051 10,937,368 18,917,416 57.8% NORMAL
Bond Redemption Funds 1,638,340 3,001,116 3,132,317 6,938,018 45.1% NORMAL
Total Expenditures $ 57,215,784 $ 52,881,267 $ 57,173,473 $157,628,194 36.3% NORMAL
Second quarter results are performing as expected. Most variances at this time of the year are related to
timing, which is why they are getting a Normal status.
Many Operating/Enterprise Funds have a seasonal component, and are not as active in the cold winter
months (i.e. Refuse does not do yard waste, Water and Wastewater accelerate their programs during the
good weather, Convention Center activity picks up in the spring, etc.) Equipment Rental vehicle purchases
are typically ordered, but not yet received. Conversely, some expenses are due in entirety in the first
quarter, such as the half of the contributions to Risk Management and Irrigation ditch charges.
The ONDS fund's budget has many large projects that did not have much activity in the first half.
Similarly, the Environmental Fund budget includes a grant from the Department of Ecology to clean-up a
Tiger Oil site. This work is just getting started. As is typical with grant - funded programs, the expenditures
have to be made before we can be reimbursed.
Capital Fund budgets include the full project, and are not expected to be 100% completed in the current
year. The projects budgeted to be funded by limited tax general obligation bonds are currently "on hold"
until we can identify available funds to repay the future debt service. Funding for N 1st Street is being
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researched, and the related utility projects will not go forward until the Street project does. The large
equipment purchases (such as Transit buses and Fire apparatus) have been ordered, but depending on the
demand at the manufacturers, it could take up to a year to actually receive the equipment. We received
three buses ordered last year, and there are an additional 4 still on order. The Airport taxi way project got
under way in the 2 quarter. The City purchased the land from SOZO in 2015, and will pay for the
improvements as they occur throughout 2016. A listing of the top ten budgeted projects and their first
quarter expenses follow.
Reserve Funds are slightly ahead in revenue, primarily because a full year of "premiums" (i.e. transfers
from all the applicable operating funds) to Risk Management are made in the 1st half of the year, which are
then used for the purchased liability and property insurance premiums. Expenditures in Risk
Management also includes the $1.8 million settlement to the ACLU for the Voting Rights Act lawsuit paid
out in April. Available cash is minimal in this fund after insurance premiums and the large settlement.
This fund will likely need an interfund loan to cover ongoing program costs for the rest of the year. The
2017 budget tentatively includes a 12% increase in premiums to begin to replenish this reserve balance.
The Employees' Health Benefit Fund has used about $300,000 of fund balance through the first half of the
year — even though effective cost containment measures have been in place. Because of this trend, coupled
with a change in the underlying healthcare program that moves from reference -based hospital facility
costing back into utilizing a discount network, we implemented a mid -year "premium" increase of about
5 %, to cover claims for the rest of the year and keep an adequate reserve balance. We will be working with
all operating budgets to make sure they can absorb this increase. There may be a few instances where that
may not be possible, and those will be included in the mid -year appropriation ordinance after we get the
2016 budget estimates set (probably late September).
The Wellness /Employee Assistance Program (EAP) fund is funded annually at the end of the year by a
transfer from operating funds of the City's portion of insurance premiums budgeted for unfilled /vacant
positions, so the full budget is "pre- funded" and there is no revenue in this fund until year -end. Revenue
in the Firemen's Relief and Pension Fund are tied to the property tax collection calendar —the positive
revenue variance is a timing issue (as described in the General Government section).
Revenues in Bond Redemption Funds are generally deposited /transferred ratably throughout the year, but
the bulk of debt service payments are made in the second and last quarters. For existing bond issues, these
funds will always approximate budget. The only real chance for a variance from budget is if an actual debt
service schedule for new debt differs from a budgeted estimate.
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TOP 10 CAPITAL PROJECTS
These 10 projects represent about 58% of the total capital budgets:
Total Actual
2016 2016 Expected
Project Number/Description Dept Budget Expended Funding Source Completion
2376 Airport -Alpha Taxiway AP $10,120,000 $ 2,455,118 FAA Grant FY2016
Construction Passenger Facility Charges
2390 N 1st St Revitalization Phase II ST 6,855,000 153,156 Street Capital Reserves ?
State Grant, $6m LTGO Bond
2426 Road Improvements ST 5,000,000 - LTGO Bond ?
2365 Beech St Interceptor Phase III WW 4,000,000 - Charges for Services FY2016/17
Capital Reserves
2406 SOZO Improvement & Land PK 3,350,000 478,259 LTGO Bond (carryover) FY2016
Purchase Phase II
n/a Transit Bus Replacement (7) TR 3,094,000 1,414,325 Transit Sales Tax, Capital FY2016/17
(3 received, 4 on order) Reserves, WSDOT Grant
2405 Yakima Central Plaza Phase II CBD 2,800,000 510,172 Community Donations, FY2016/17
LTGO Bonds
TBD N 1st St Revitalization - Stormwater SW 1,790,000 - Charges for Services ?
Capital Reserves
2391 N 1st St Revitalization - W 1,200,000 - Charges for Services ?
Water Main Replacement Capital Reserves
n/a Fire ladder truck replacement F 1,150,000 - Fire Capital Reserves, FY 2015/16
(on order) State LOCAL lease program
$39,359,000
Department Legend:
AP - Airport ST - Street Improvement
CBD - Central Business District TR - Transit
WW - Wastewater Capital F - Fire Capital
SW - Stormwater PK - Parks Capital
W - Water Capital
Yakima. 7345 .1.FIN_Report_2nd_Qtr_2016.docx 10 of 14
EXHIBITS
Exhibit I
OTHER OPERATING /ENTERPRISE FUNDS
Actual Revenues Appropriations Ending
Beg Bal Amended Actual % Amended Actual % Balance
Fund 01/01/16 Budget Revenue Rec'd Budget Exp Exp'd 12/31/16
Economic Development $ 76,421 $ 183,000 $ 82,441 45.0% $ 198,071 $ 71,049 35.9% $ 87,813
Neighborhood Development 897,054 3,338,886 198,746 6.0% 3,349,462 528,944 15.8% 566,856
Community Relations 657,412 666,600 170,022 25.5% 618,913 279,883 45.2% 547,551
Cemetery 37,538 262,950 123,626 47.0% 273,542 138,298 50.6% 22,866
Emergency Services 203,162 1,326,026 744,636 56.2% 1,407,117 662,635 47.1% 285,163
Public Safety Communicatic (361,269) 3,499,468 2,209,889 63.1% 3,563,096 1,780,547 50.0% 68,073
Police Grants 371,378 416,000 320,018 76.9% 369,716 103,077 27.9% 588,319
P.B.I.A. (Parking & Bus Impr (4,561) 205,340 109,231 53.2% 208,993 96,120 46.0% 8,550
Trolley 73,180 91,433 1,275 1.4% 164,855 73,168 44.4% 1,287
Front Street Bus Impr Area 4,679 3,735 5,703 152.7% 10,279 6,094 59.3% 4,288
Cony Center (Tourist Promo 528,261 1,683,800 699,291 41.5% 1,694,510 834,157 49.2% 393,395
Capitol Theatre 26,567 414,700 205,340 49.5% 420,497 227,089 54.0% 4,818
PFD- Convention Center 514,586 828,750 408,632 49.3% 727,720 362,084 49.8% 561,134
Tourism Promotion Area 80,822 687,000 269,790 39.3% 687,000 210,238 30.6% 140,374
PFD- Capitol Theatre 166,911 624,800 309,531 49.5% 630,883 314,165 49.8% 162,277
Airport Operating 46,313 1,134,929 559,230 49.3% 1,128,985 599,236 53.1% 6,307
Stormwater Operating 694,688 2,151,000 1,689,296 78.5% 2,638,104 1,130,237 42.8% 1,253,747
Transit Operating 1,954,958 8,701,402 3,595,175 41.3% 8,368,765 4,047,346 48.4% 1,502,787
Refuse 59,564 6,595,262 3,235,824 49.1% 6,452,485 3,148,987 48.8% 146,401
Wastewater Operating 4,309,330 22,102,484 10,683,451 48.3% 22,540,390 10,830,886 48.1% 4,161,895
Water Operating 3,130,380 8,816,000 3,899,741 44.2% 9,373,857 4,906,881 52.3% 2,123,240
Irrigation 897,427 1,803,540 933,762 51.8% 1,802,149 894,160 49.6% 937,029
Equipment Rental 4,057,425 4,722,942 2,146,701 45.5% 4,765,532 1,904,008 40.0% 4,300,118
Environmental 565,281 1,180,000 87,672 7.4% 1,247,950 39,946 3.2% 613,007
Public Works Admin. 484,256 1,143,324 572,186 50.0% 1,250,472 642,359 51.4% 414,083
Total Other Operating Funds $19,471,763 $ 72,583,371 $ 33,261,209 45.8% $ 73,893,343 $ 33,831,594 45.8% $18,901,378
Yakima. 7345 .1.FIN_Report_2nd_Qtr_2016.docx 11 of 14
Exhibit II
CAPITAL IMPROVEMENT FUNDS
Actual Revenues Appropriations Ending
Beg Bal Amended Actual % Amended Actual % Balance
Fund 01/01/16 Budget Revenue Rec'd Budget Exp Exp'd 12/31/16
Arterial Street $ 1,281,875 $10,397,841 $ 1,199,513 11.5% $10,737,025 $1,154,979 10.8% $ 1,326,409
Central Bus District Capital (23,298) 2,826,220 817,391 n/a 2,881,000 513,838 17.8% 280,255
Capitol Theatre Construction 248,750 66,641 33,321 n/a 70,000 2,478 n/a 279,593
Yakima Redevelopment Area 701,125 1,000,000 1,005,667 100.6% 1,500,000 276,992 18.5% 1,429,800
Parks and Recreation Capital 3,810,256 508,400 296,767 n/a 1,824,049 874,566 47.9% 3,232,457
Fire Capital 36,925 2,242,410 91,638 4.1% 2,239,976 153,650 6.9% (25,087)
Law and Justice Capital 740,305 479,350 233,612 48.7% 693,000 198,553 28.7% 775,364
Public Works Trust Constr 1,171,476 802,000 433,915 54.1% 1,011,385 265,068 26.2% 1,340,323
REET 2 Capital 352,961 802,000 433,915 54.1% 978,250 701,817 71.7% 85,059
Street Capital 94,164 5,095,306 20,879 0.4% 5,000,000 167 n/a 114,876
Convention Center Cap Impr 585,025 360,400 179,950 49.9% 385,000 36,190 9.4% 728,785
Reserve for Capital Impr 1,617,047 300,000 301,500 100.5% 765,000 383,193 50.1% 1,535,354
Airport Capital 795,550 11,325,568 2,392,715 21.1% 11,645,247 2,473,873 21.2% 714,392
Stormwater Capital 3,044,907 700,000 350,000 50.0% 2,400,000 2,759 0.1% 3,392,148
Transit Capital 4,464,872 3,849,875 1,182,571 30.7% 4,334,205 1,570,447 36.2% 4,076,996
Wastewater Capital 10,256,929 3,501,500 1,768,187 50.5% 7,790,000 297,711 3.8% 11,727,405
Water Capital 4,010,943 1,000,000 375,000 37.5% 2,257,738 113,120 5.0% 4,272,823
Irrigation Capital 1,503,177 1,387,060 613,879 44.3% 1,367,542 252,793 18.5% 1,864,263
Total Capital Impr Funds $ 34,692,989 $ 46,644,571 $11,730,420 25.1% $ 57,879,417 $ 9,272,194 16.0% $ 37,151,215
Yakima. 7345 .1.FIN_Report_2nd_Qtr_2016.docx 12 of 14
Exhibit III
RESERVE AND OTHER FUNDS
Actual Revenues Appropriations Ending
Beg Bal Amended Actual % Amended Actual % Balance
Fund 01/01/16 Budget Revenue Rec'd Budget Exp Exp'd 12/31/16
Employee Benefit Reserves
Unemployment Comp Res $ 441,244 $ 197,000 $ 103,403 52.5% $ 227,351 $ 74,638 32.8% $ 470,009
Employees Health Ben Res 1,616,969 10,407,500 5,043,169 48.5% 10,388,338 5,351,165 51.5% 1,308,973
Worker's Compensation Res 734,214 1,069,780 548,313 51.3% 1,311,017 457,183 34.9% 825,344
Wellness /EAP 127,185 121,800 463 0.4% 121,800 24,722 20.3% 102,926
Firemens' Relief and Pension 1,019,850 1,324,260 767,321 57.9% 1,349,628 621,975 46.1% 1,165,196
Total Employee Ben Reserve $ 3,939,462 $13,120,340 $ 6,462,669 49.3% $13,398,134 $ 6,529,683 48.7% $ 3,872,448
Operating Reserves
Capitol Theatre Reserve $ 36,641 $ - $ - n/a $ 36,641 $ 18,321 50.0% $ 18,320
Risk Management Reserve 733,243 4,894,000 3,470,130 70.9% 4,864,864 4,134,567 85.0% 68,806
Total Operating Reserve $ 769,884 $ 4,894,000 $3,470,130 70.9% $ 4,901,505 $4,152,888 84.7% $ 87,126
Trust and Agency Funds
Cemetery Trust $ 647,731 $ 21,000 $ 4,319 20.6% $ 12,000 $ - 0.0% $ 652,050
Agency Fund - YAKCORPS - 605,777 664,615 109.7% 605,777 254,797 42.1% 409,818
Total Other Funds $ 647,731 $ 626,777 $ 668,934 106.7% $ 617,777 $ 254,797 41.2% $1,061,868
Yakima. 7345 .1.FIN_Report_2nd_Qtr_2016.docx 13 of 14
Exhibit IV
BOND REDEMPTIONS FUNDS
Actual Revenues Appropriations Ending
Beg Bal Amended Actual % Amended Actual % Balance
Fund 01/01/16 Budget Revenue Rec'd Budget Exp Exp'd 12/31/16
GO Bond Redemption
LID Guaranty $ 25,329 $ 50 $ - 0.0% $ - $ - n/a $ 25,329
2002 GO Convention Center 163,591 1,026,103 513,046 50.0% 1,024,025 550,700 53.8% 125,937
2005 GO Various Bonds 8,734 3,312,239 2,240,707 67.6% 3,312,239 2,224,740 67.2% 24,701
1996 GO LTD- Cony Center 69,030 428,750 172,966 40.3% 424,700 29,850 7.0% 212,146
LID Debt Service Control - 48,000 64,219 133.8% 48,000 - 0.0% 64,219
Total G.O. Bond Redemption $ 266,684 $ 4,815,142 $ 2,990,938 62.1% $ 4,808,964 $ 2,805,290 58.3% $ 452,332
Water /Sewer Revenue Bond Redemption
Water Rev Bonds & Debt Service 366,380 235,125 117,350 49.9% 234,700 14,850 6.3% 468,880
WW Rev Bond & 2008 Debt Service - 411,813 205,906 50.0% 411,813 80,906 19.6% 125,000
Irrigation Bond Debt Service 34,813 317,542 158,870 50.0% 317,541 91,271 28.7% 102,412
WW Rev Bond Reserve & 2012 Debt Svc 1,618,148 1,166,700 582,500 49.9% 1,165,000 140,000 12.0% 2,060,648
Total W/S Rev Bond Red $ 2,019,341 $ 2,131,180 $1,064,626 50.0% $ 2,129,054 $ 327,027 15.4% $ 2,756,940
Yakima. 7345 .1.FIN_Report_2nd_Qtr_2016.docx 14 of 14
MEMORANDUM
To: All Department Directors
All Division Managers
All Administrative Support Staff
From: Cliff Moore, City Manager
Date: July 18, 2016
RE: Fiscal Year 2017 Budget Guidelines
The purpose of these instructions is to communicate the process we will be using to
develop the FY 2017 budget. We will be considering key strategies, priorities, and
objectives with the overall goal of allocating resources to meet the following strategic
priorities of the City Council:
■ Economic Development
■ Public Safety
■ Neighborhood and Community Building
■ Public Trust and Accountability
■ Partnership Development
The following key principles will be observed as we prepare the City's FY 2017 budget
and a new five -year financial plan.
• The City must adopt a balanced budget that is fiscally prudent and
sustainable. This may require departments to change the method of service
delivery, change the current service levels, or discontinue certain services in
order to live within available resources.
• Department goals should align with the City Council's five strategic priorities.
• Departments prepare concise business plans that describe how goals,
objectives, and key intended outcomes will advance the City's five strategic
priorities and the citizen survey. In summary, identify outcomes to be
achieved with proposed resource requests.
• Identify key performance measures to evaluate the effectiveness and
efficiencies of meeting the strategic priorities and key intended outcomes.
• Identify programs or services that can be subject to "managed competition" or
alternative service delivery options.
• Identify capital investments for projects, facilities and equipment that will
optimize city infrastructure, services, and operational efficiencies. Include
maintenance and operating costs in your capital requests.
• Assume no base compensation increases unless negotiated in current
collective bargaining agreements. Budget all scheduled performance -based
merit increases.
• New or reclassified positions will be considered on an extremely limited basis.
• Unrestricted reserve funds shall only be used for one -time capital costs.
Maintain flat or moderate maintenance and operating expense adjustments.
• Training costs should be based on specific training needs identified in each
department's business plan. Use training to enhance employee productivity
and performance. To save travel expenses, identify training that can be
brought in house ", maximizing the use of the City's training facility.
• Identify significant programs and operational changes separately as a policy
proposal to meet strategic priorities. Significant operation program changes
include:
o Major service reductions or expansions;
o Any increase or decrease in staffing levels;
o Significant one -time costs;
o Significant ongoing cost increase to maintain existing services or
changes in the method of service delivery;
o Changes in operations that will significantly affect customer service —
either external or internal to the organization; and
o Proposed fee increases or new revenue sources.
As possible, any proposal for additional budget authority for staff or
programs should come with proposed reductions in other areas.
Finance will be submitting more detailed instructions for budget development under
separate cover.
MEMORANDUM
July 15, 2016
TO: Department Directors and Division Managers
FROM: Cindy Epperson, Director of Finance and Budget
SUBJECT: 2017 Detailed Budget Instructions
The City Manager will issue a separate Budget Guideline memo, which will outline the conceptual
framework of the 2017 budget development. This communication provides more detailed "how -
to" guidance for the budget process. If there are any questions after reading the enclosed
information, feel free to contact me at 576 -6644.
Budget Development Overview
We are using the Payroll Budget system as we have in prior years to derive 2017 staffing costs
because it is integrated to our payroll system and can project both salary and most benefit costs
with a high degree of accuracy. Staffing costs are calculated based on current employees and
bargaining unit settlements. Vacant positions are projected at step B. The resulting 2017 salary and
benefit budgets will be uploaded into the Cayenta Projected Budget.
Projected 2017 non -staff amounts and all estimated year end amounts for 2016 (including salary
and benefit costs) will be entered by managers, directors or their designees into an Excel Budget
spreadsheet that is designed to interact with the Cayenta Budget system. Submitted Budget sheets
will be uploaded or entered into the Cayenta system by Finance staff. A detailed overview of
assumptions and how to complete the various processes and budget sheets follow by section.
Training will be offered during the week of July 18 at CYU. All staff involved in the budgeting
process are encouraged to sign up on ICE and attend one of the sessions.
Distribution Account Codes (DACs)
The account code structure used by our budget system corresponds to the General Ledger. The
structure is FFF SSS0000 where FFF is the 3 digit fund number followed by a space, the 3 digit
department function (commonly known as the service unit) and finally the 4 digit object code that
indicates the type of account it is.
The funds fall into State - prescribed groupings:
• 000 for General Fund (we use 001 and 003 to avoid problems with using zeros in
computerized systems)
• 1xx for Special Revenue funds
• 2xx for General Obligation debt service
• 3xx for Governmental Capital funds
• 4xx for Proprietary
• 5xx for Internal Service funds that provide services to other operations at cost
• 6xx and 7xx are for Trust and Agency funds
• 8xx and 9xx are for Clearing, Suspense and Governmental Accrual Accounting
Budget Guidelines -1
Department codes reside in the background of Cayenta's numbering structure and allows us to
group various service units (department functions) together for reporting and analysis. (Please note
that all revenue accounts have a function of 895.) These departmental codes are not influenced by
state requirements and so are entirely defined by the City. They are structured roughly according to
areas of responsibility. For example: Police has department number 310 in the background of all
their service units. The service units for Police are 311 — 319 and include the various functions in
their department from Patrol to Detention to Administrative. If you wish to track additional
services separately we can discuss the possibility of a new service unit for you. Also, if you wish to
combine some service units to make things less complex, we may be able to do that too. Please
discuss this with us at your budget meeting where we can weigh the pros and cons.
Object codes define the type of the account. Revenue objects generally reflect the state - defined
BARS numbering system (BARS codes reside in the background however so that when the state
changes codes the account number may remain the same.)
The first digit of the Expenditure accounts is defined by the state as follows:
• lxxx indicates salaries and wages
• 2xxx indicates benefits
• 3xxx is for "stuff" - supplies, materials and minor equipment under $5000
• 4xxx indicates services - contracts, repairs, maintenance and other "nonstuff" expenses
• 5xxx is for governmental services — things that don't qualify as regular services (inspections,
detention, etc.)
• 6xxx is for capital expenditures — items costing $5000 or more and expected to last more
than a year. These items are typically included in your Strategic Initiatives (policy issues)
• 7xxx and 8xxx are for debt principal and interest payments respectively and will be
budgeted by Finance staff according to debt service schedules
Since the state only cares about the first digit of an object code, there is a lot of room for the City to
track various kinds of expenditures. Let us know if you need to track something special and we can
assign a new object code to your service unit. An example would be Finance's "services" codes --
we are keeping banking fees separate from all other service costs so it has its own object code. If
you would like to add an account, please contact Tara Lewis.
Job Cost Estimates
As yet, there is not a direct budgeting tool to load job cost detail into the budget. However, you
may use the Job Cost Estimate feature in Cayenta to project detailed project costs and then
summarize those costs to derive your General Ledger account totals. Projects tracked in Job Cost
roll to grouped General Ledger accounts. For example, the Arterial Street Fund may have six
projects that charge a "roadway" account object. The expenditures from all six projects for a given
object will roll to a single GL account. In order to budget properly, the Job Cost reports and /or
statistic report should be used to estimate the details of each project. The totals by object are then
input to the corresponding GL account lines. We encourage you to use the Job Cost Estimate
function as a way to track your projects in the Job Cost system. Any estimates you enter will print
on the job cost reports. Instructions for job cost reporting and statistics are on ICE, along with
instructions for entering your Job Cost estimates so they will print on reports or be available on
Cayenta.
2 — Budget Guidelines
Budget Development Assumptions
The 2017 initial budget is based on the 2016 Adopted Budget, adjusted for the following items:
➢ Any negotiated increases in base wages (at this point in time, most units are settled for 2017)
➢ Applicable compensation adjustments including:
• Longevity
• Approved Civil Service actions
• Merit (step) increases — please review for accuracy - -the budget system is extracting
personnel related information directly from payroll as of June 30, 2016, and has
calculated the total based on the next scheduled step increase.
• Workers' Compensation, and Unemployment Insurance are unchanged from 2016- -
subject to further review.
• Medical — Includes the July, 2016 increase but no additional change at this point— subject
to review
➢ 12% Insurance increase — Risk Management
➢ Utility Rate Increases: These rates are currently unchanged for initial budget development -
-this will be reviewed as the process goes forward.
➢ Internal charges (first estimate):
• 2.5% Equipment Rental Maintenance and Operations — This is the overall estimate
because of payroll increases, but this is one area that the 2016 estimate will likely need to
be adjusted, because jobs are being charged in "real time ".
• 2.5% Public Works Administration
• 2.5% City Service Charge
➢ Telephone charges will be set by Technology Services for all departments and divisions.
Please contact Wayne Wantland if you anticipate changes to your telephone usage and /or
equipment
Budget Development Instructions
The 2017 Staffing and Payroll Budget Worksheets for each division are attached. Since the payroll
budget is calculated by the Payroll Budget system, you may not directly enter most salary and
benefit lines into your 2017 Budget. To make changes, use the staffing worksheets where you may
adjust staff cost allocations, add or delete positions (any position changes that add cost or
reorganize a staffing unit should be detailed in a Strategic Initiative for separate consideration and
attention in the budgeting process).
Submit your 2017 Staffing and Payroll Budget worksheets to Maria Simons in Finance no later than
July 29, 2016. She will input the changes and update the 2017 Payroll budget accordingly.
Detailed instructions for the new Excel Budget sheets will be given at the Budget Training sessions.
An overview of the process follows:
The Excel workbooks are structured by area of responsibility. A manager may get one large
area with a number of service units together such as all of Water, or may get several
worksheets with different areas such as HR, Medical, Workers Comp, Unemployment
which should not roll together in overall budgeting.
Budget Guidelines — 3
General Fund departments /divisions will NOT receive revenue budget lines. Cindy is
responsible for the General Fund Revenue budget and will contact various managers and
directors as needed for information regarding specific line items.
The Excel budget worksheets contain similar data as the former paper budget sheets. The
columns included in the worksheets are:
• Prior Year (2015) Actual results
• Prior Year to Date Actual (currently as of June 30, 2015)
• Current Year (2016) Amended Budget
• Year to Date Actual (currently as of June 30)
• Current Year End Estimate
• 2016 Adopted Budget
• 2017 Projected
The 2016 Amended Budget column includes appropriations that have gone to Council.
Currently, non - lapsing (i.e. capital project carry- forward) appropriations have not yet been
entered. Please work with your accountant to identify applicable non - lapsing
appropriations.
The Year -to -Date actual column includes June payroll and most of the 2nd quarter charges
and revenues.
Estimated Year End:
The Year End Estimate is initially set up as the 2016 Amended Budget and should be
changed to reflect your best estimate as to what the cost /revenue will be for the entire year.
You are encouraged to use special care in estimating year end salary figures. Take into
consideration upcoming retirements, new hires, position vacancies, expected overtime and
employee vacation cash outs as well as retirement cash outs. Please enlist the assistance of
our Payroll Officer, Diane Schmitt for estimated upcoming retirement cash outs.
Note: If one expenditure account is going over budget, another account will need to be
adjusted downward (within the same department and fund) so that the net year -end
expenditures do not exceed the budget!
Although it is early in the year, it is important that these estimates be as accurate as possible.
They are used in determining the 2017 beginning fund balance, which is added to revenue
budgets to determine the total funds available for 2017 budget expenditures.
2017 Projection:
The 2017 Projection is initially set as the 2016 Adopted Budget. This is because the Amended
Budget often contains one -time adjustments that may over or understate normal operations.
Lines marked "staff" should not be altered. Again, use the staffing worksheets to adjust data
for the Payroll Budget. Any amounts entered on staff lines will be discarded and
overwritten by the Payroll budget. Other salary related lines such as cash outs for retirement
or annual leave, overtime and special pay should be entered.
4 — Budget Guidelines
Please use the most current information available, your best judgment and the department's
proposed operating plan to derive the best projections you can. Please contact Finance if you
have information on events that may affect projections that you cannot yet calculate. It is
important that we include as many variables as possible during the budgeting process.
Current Action Items and Time Lines
Friday July 29, 2016 — Both the payroll staffing worksheets and the Excel worksheets are due. Please
be sure to keep copies of both for your records. Early submittal is encouraged and appreciated.
Once data has been uploaded and reviewed, preliminary budgets will be available for your review.
More information will be forthcoming as the electronic submission process is fine - tuned.
Any material deviation in total fund /department spending or revenue totals in 2016 from the
Amended Budget will need to be addressed immediately with the City Manager and Budget
Director.
Wednesday August 3, 2016 — All Strategic Initiative Policy Issues anticipated to be included in the
2017 budget are due to the Finance Department in draft form. All proposals should be submitted
using the form which is available on ICE or from Kathy Miles. Changes may be made to Strategic
Initiatives as agreed upon in Budget meetings so if plans are uncertain, be sure to submit a draft
with your best estimate of the plan. Strategic Initiatives will be finalized later in the process, but it is
important to have a placeholder in the budget during the process.
Other Notes and Clarifications
Temporary Staff — If recent changes in the state minimum wage affect your operation, please work
with Maria Simons in Finance to adjust your temporary staffing budgets accordingly.
Travel and Training Expenditures (Account #4300) — Make sure account #4300 includes only room,
meal, mileage and general subsistence costs. Registration fees are to be budgeted in Account 4910.
Please detail your training needs for staff review.
Equipment Operation And Replacement Charges — Please contact the Fleet Manager, Richard Wormer, if
you have a need to add or replace rolling stock — additions to the fleet require a Strategic Initiative.
The Equipment Rental and Replacement Fund owns all rolling stock that can be capitalized (i.e. a
useful life greater than one year with a cost greater than $5,000) with the exception of Fire, Transit
and Police. The procedures relating to the Equipment Rental Fund are set forth in the Municipal
Code, Chapter 3.15.
Capital Outlay — Capital purchases and projects for 2017 need to be analyzed based on need and
resource availability. Requests should include sufficient justification for City Manager and /or
Council consideration.
Contact the Purchasing Division for assistance in developing estimates for major purchases.
(Purchases below $5,000 per individual item are not considered capital outlay, and would likely be
included in the budget as "small tools and minor equipment. ")
Budget Guidelines — 5
It is expected that the capital funds would need to be adjusted for both ongoing and new projects.
For capital projects budgeted in 2016, please provide an estimate of costs expected to be completed
by the end of 2016 - the balance of the project should be re- budgeted in 2017.
Revenues - The 2016 budgeted revenues have also been programmatically carried forward to the
2017 budget. The Finance Department will make an estimate of general revenues that do not
require departmental input. Please analyze and update both the 2016 Year -End and 2017 estimates
in your areas of responsibility. Finance will review all revenues prior to "freezing" for the
Preliminary Budget. The adopted Financial Policy indicates that all fees will be reviewed every two
years. If you had fee adjustments proposed in the June 7 Council packet, please develop a strategic
initiative.
6 - Budget Guidelines
OVERVIEW OF THE CITY'S ANNUAL BUDGET PROCESS
Step 1: Distribution of Budget Guidelines along with Staffing and Payroll Budget Sheets (Target date
July 15) — Distributed to all Department Heads and Division Managers by Finance.
Step 2: Budget Training Sessions (Target date week of July 18) — All managers, directors and those
involved in the budget preparation process are encouraged to attend. Training on how
to complete the Staffing and Payroll budgets and Excel budget sheets.
Step 3: Year -End Estimate and Next Year's Proposed Revenue and Expenditure Budgets Submitted
(Target date July 29) — Updated budget worksheets are submitted to the Finance
Department by Division Managers for processing and preparation in advance of the
Administrative Budget Review meeting.
Step 4: Review and Discussion of the 2017 Draft Strategic Initiatives (Concepts Due to Finance August
3) — Discuss with City Manager at next Department Head meeting
Step 5: Administrative Budget Reviews — Department budget review meetings are held with
Finance department staff from the first part of August to mid - September. Should any
essential people (Department Director and Division Managers) be unavailable for
budget meetings at any time during this period, please contact Kathy Miles in Finance
to advise her of your schedule. Budget requests are adjusted as needed.
Step 6: Update and Preparation of Departmental Budget Information — With cooperation from the
various Department Directors and staff, the Finance Department prepares this
information as adjusted during the administrative budget review meetings.
Step 7: 2017 Preliminary Budget Executive Summary is Prepared and Submitted to Council — This will
include summary information at the fund level with the full write -up of policy issues
incorporated into a preliminary budget summary. This is targeted to be submitted to
Council by October 18.
Step 8: Budget Narratives — Each department /division will prepare their budget narratives including
statistical data for inclusion in the Adopted Budget document. Updates will be allowed for
last minute changes due to public or Council input. Submit to Finance by December 1.
Step 9: Public Budget Hearings — As required by law, will be held on or before the first Monday
in December of each year. (Generally this is held the last Council meeting in
November.) A final public hearing is held at the first meeting in December.
Step 10: Final Council Budget Review Meeting— To prepare for Public Hearing, the City Manager
and the Finance Department summarize any changes from the preliminary budget.
Step 11: Council Passes Ordinance — The ordinance approving the 2017 Budget is passed at the first
or second Council meeting in December.
Step 12: Prepare the 2017 Adopted Budget document (Targeted for mid - January) — Finance will finalize
the budget documents and publish the Adopted Budget.
Budget Guidelines — 7