HomeMy WebLinkAbout13.F.1. 2008 General Fund Budget ~ t ~ i { y
CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
.Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBS: 2008 General Fund Budget
DATE: February 15, 2008
Introduction
Council is requested to provide direction on the 2008 Budget following
the meeting of 2/11/08.
Background
1. Under-spend
Following the discussion on 2/11/08, staff clearly understands the need
to "under-spend" the 2008 budget in total by 4~. Council has been
including the under-spend factor in budget for several years as a way
to lower the tax levy by recognizing that experience has been not to
spend 100$ of the budget.
The 2008 budget as adopted in December shows a deficit or draw down of
fund balance of $892,000. $100,000 is for one time items, $110,000
would come out of the BATC reserve and the balance of $682,000 is the
under-spend. If the budget was 100 spent, fund balance would go down
by $682,000. Conversely, if the budget is under-spent by 4~, fund
balance would be unaffected and if under-spent by more than 4~, fund
balance would go up.
The formal way communicate this to staff would be to amend. the budget
to reduce appropriations (cut the budget} in total by 4~5. How much any
particular division is under budget in a year varies as is the ability
to reduce its budget and still provide necessary services.
Under either of the above, the bottom line result should be the same
which is that expenditures are 4% less than the originally adopted
budget.
Alternatives
A. Status Quo - the need to ensure that the budget is under-spent has
been communicated to staff.
B. Direct staff to prepare a budget amendment to reduce appropriations
by 4~.
22.
Staffingissues
The second area is what steps should be taken in 2008 in anticipation
of subsequent years budgets.
Consensus of council appeared to be to continue with the"'Fire Chief
process and filling the two existing vacancies for police officers.
Filling the two new police officer positions and any vacancies that
occur should be brought to council for direction before starting any
hiring process.
Assuming that revenues come in as budgeted, the amount of the budget
that is not spent at year end stays in fund balance. For subsequent
years, it is strongly recommended (and scrutinized by Moody's) that
fund balance not be used to pay for ongoing operating costs. What
council has been doing is using fund balance to pay for "one time"
items such as capital equipment that are not ongoing costs.
Additional data is expected in late March as to the possible tax
capacity for 2009. Staff will be looking at steps that could be taken
is 2008 in preparation for 2009 budgetfservice reductions. Taking
action in 2008 would ease the transition of service reductions into
2009.
Action
1. Move to direct staff to prepare a 2008 budget amendment to reduce
appropriation by 4g.
2. Move to continue with the Fire Chief process and filling the two
existing vacancies for police officers, and that filling the two new
police officer positions-and any vacancies that occur should be brought
to council for direction before starting any hiring process.
Gregg Voxland
Finance Director
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