Workshop Item: 1 - Joe Huss, Finance Director
Title
2013 DRAFT BUDGET DISCUSSION
Background
At the July 19, 2012 Budget Workshop, staff presented Council with a 2013 Departmental Requested draft budget. The draft was presented under two levy scenarios: (1) a no levy increase scenario wherein the levy remains the same as in 2012; and (2) a no rate change scenario wherein the estimated tax rate would remain the same in 2013 as in 2012. Under either scenario, a funding gap exists - requested expenditure appropriations exceed funding sources. In round numbers, the funding gap ranges from $500,000 (with no levy increase) to $2 million (with no rate increase.) The Finance department has completed its review, and the budget process has now moved to the City Manager Review phase. Staff continues to operate under certain zero-based budgeting methods and the budgeting parameters established in previous Budget Workshops, such as:
1. Establishing the process to achieving overall City goals and initiatives by defining each department, division, program, or activity's purpose and responsibility;
2. Development of operating assumptions that identify specific programs and activities that will accomplish established goals;
3. The resources required to operate the specific programs and activities;
4. Estimating the cost of resources.
At this stage of the process, the immediate goal is to reduce the $500,000 funding gap that exists under the no levy increase scenario. While some adjustments have been made, it is likely that this process will continue for some weeks before Manager recommended reductions are presented to the Council. In the current version of the 2013 Draft Budget, future reductions are not specifically identified, but are shown as "Balancing Reductions". It is anticipated that staff will return with a balanced budget in early October.
However, tonight's review is the final scheduled Budget Workshop before action is taken on the Preliminary Levy and Budget. As a reminder, cities are required by statute to each year adopt a preliminary tax levy and budget by September 15. As always, the preliminary tax levy may not be increased, but Council can always reduce the preliminary levy before final adoption in December. The budget can be adjusted before final adoption as well. Absent other Council direction, staff is recommending that Council adopt a no levy increase for the preliminary levy and a balanced budget with roughly $500,000 in unspecified reductions. Staff will continue its work to identify specific reductions that will be presented to Council in October as the City Manager's Recommended Budget.
Recommendation
Staff is seeking Council direction regarding the recommendation to adopt a no-increase preliminary levy and a General Fund budget reflecting $500,000 in unspecified reductions.