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Home My WebLink About8.4 2002-03 BudgetModific CITY CLERK File #330-20 AGENDA STATEMENT CiTY COUNCIL MEETING DATE: June 24, 2003 SUBJECT: 2002-2003 Budget Modification with Regard to Article XIII B of the State Constitution (Prepared by: Carole A. Perry, Administrative Services Director and Fred W. Marsh, Finance Manager) ATTACHMENTS: None RECOMMENDATION: ('bSf~ Authorize appropriations to Reserves, any revenues in excess of · ;-- budgeted expenditures as of June 30, 2003, as outlined below. FINANCIAL STATEMENT: This action will provide appropriations to Reserves in the amount of any revenues received that are in excess of expenditures. This action will not change the amounts authorized for expenditure. Actual amounts appropriated to Reserves in each Fund will be identified after the books are closed and all accruals recorded. DESCRIPTION: This action requests authorization to "appropriate" all revenues received in the current Fiscal Year 2002-2003 that are in excess of expenditures. The actual amounts involved will be determined following the close of Fiscal Year 2002-2003. Each year the City Council takes this action to protect the ability to utilize these reserves in future years, without the risk of exceeding the State mandated Appropriations Limit. The State Constitution establishes a limit on the amount of annual appropriations that can legally be made from "Proceeds of Taxes." Although the City is currently well below the maximum Appropriations Limit, this action will protect future expenditures from Reserves. Under State Law certain funds can be excluded from the calculation of the total "appropriations" which will be subject to the Limit. The law specifically excludes funds that have been "appropriated" to Reserves in a prior fiscal year. When the Reserve Funds are eventually used, they are not subject to the Appropriations Limit in the year utilized, since they were previously "appropriated" under the Limit authorized in a prior year. In other words, if the City Council appropriated $500,000 to Reserves in Fiscal Year 2002-2003 and the funds were used on a capital project in Fiscal Year 2004-2005, this expenditure would not be subject to the Limit. At the time of the adoption of the Fiscal Year 2002-2003 budget, the City Council directed Staff to allocate an estimated year-end surplus of $1,030,112 to Reserves. The Reserves were earmarked for Downtown Improvements/Open Space, Affordable Housing and Economic Uncertainty. COPIES TO: ~4 C:LD ...... ts and Settings~fawnhLLocal Settings\Temporary ,nternet FiIesXOLK4I~E ..... RevtoReservAGENDASTMTO2-O3REV.DOC ITEM NO. As part of the development of the Fiscal Year 2003-2004 Preliminary Budget, Staff has revised the revenue and expenditure estimates for Fiscal Year 2002-2003. Those revised estimates project that the City's 2002-2003 year-end surplus will be approximately $3.7 million. Excluding the carry-over of $603,514 dollars in Capital Improvement Projects (CIP's) and the $1,030,112 previously allocated to reserves by the City Council, the remaining General Fund surplus is projected at $2,095,598. This is due in part to higher than expected revenues collected for sales tax, property tax and building permit fees. The Fiscal Year 2003-2004 Budget does not include any revenue reductions by the State of California, which are likely, pending the outcome of the State budget deliberations. The Fiscal Year 2002-2003 carryover could be used to offset the impacts of State revenue reductions and/or reserved for future capital projects. Should Staff's revised estimates materialize when the Fiscal Year 2002-2003 books are closed, Staff would recommend that Council consider the following additions or reductions. If the surplus exceeds Staff's estimate, Staff would recommend that the additional amounts be allocated to the Reserve for Economic Uncertainty. RECOMMENDED YEAR-END SURPLUS ALLOCATION Previously Authorized Recommended Additions / Additions / (Reductions) to (Reductions) Projected Ending Reserves in to Reserves in Balance as of PROJECT FY2002/2003 FY2002/2003 June 30, 2003 Downtown Improvements/ Open Space $373,640 $373,640 Affordable Housing $373,640 $373,640 Economic Uncertainty $282,832 $2,095,598 $2,378,430 Capital Project Carryovers $ 0 $603,514 $603,514 TOTALS: $1,030,112 $2,699,112 $3,729,224 Staff recommends that the City Council authorize the appropriation of all excess revenues to Reserves in conformance with this report.