5.6. SR 04-12-2004 - Laserfiche WebLink

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River MEMORANDUM Item 5.6. TO: FROM: DATE: SUBJECT: Mayor and Council Lori Johnson, Finance Director April 12, 2004 Consider 2003 General Fund Balance Allocation The Financial Management Plan includes a policy on the General Fund Balance that states "the General Fund shall have an unreserved balance of not less than 40 percent of the next year's budgeted expenditures. This calculation is made at the end of each fiscal year." It goes on to say that the City Council may, at its discretion, allocate any amount over the minhnum 40 percent to other purposes. The fund balance for December 31, 2003, has been calculated, and pursuant to policy, the Council mav allocate any part of the balance in excess of 40 percent prior to finalizing the 2003 comprehensive annual financial report. Attached is the General Fund balance sheet for the period ended December 31, 2003. The fund balance is $3,732,049. This is 47.39 percent of the 2004 General Fund budget. Last year, the fund balance was 41.50 percent of the next year's budget. The policy requires a 2003 fund balance of $3,150,160 to meet the 40 percent mi~mnum; this leaves $581,889 available for allocation by the Council. Hoxvever, the 2004 budget calls for use of rcse~;es of $117,000 so the amount still available for allocation is $464,889. If 2002's 41.50 percent balance is maintained, the balance available after rese~wing $117,000 is $346,758. Thc fund balance increased significantly for several reasons. First, in June major budget amendments xvere approved to address the state aid cuts approved by the legislature. This resulted in expenditure cuts and a final amended expenditure budget that was $371,200 loxver than the original budget. Department heads carefully monitored their budgets and made cuts as necessary to end the year with expenditures approximately $7,000 under budget. Second, even xvith substantial aid cuts, development and building activiD~ xvas so high that the total year end revenues exceeded the original budget (prior to aid cuts) by $163,282. It is difficult to predict building and development revenues since the City has little control on the number of building permits that xvill be requested in any given year. There were no rate or fee increases implemented to generate more revenue; this increase in revenue is shnply a function of thc number of development requests and building permits issued. There were, hoxvever, some offsetting expenditures to cover overtime for inspectors, S:\Council\Lori\2004\Gencral Fund Balancel .doc