CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 1 of 15 Item #15 CITY COUNCIL AGENDA REPORT November 19, 2024 Finance TITLE: ADOPT A RESOLUTION TO ACCEPT THE FY 2023/24 YEAR-END OPERATING BUDGET REPORT, APPROVE BUDGET AMENDMENTS IN MULTIPLE FUNDS, AND DESIGNATE THE GENERAL FUND BALANCE SUMMARY This report presents the results of City operations for the FY 2023/24 Operating Budget (Budget) and recommends adjustments and designations of the General Fund reserves. This information is unaudited. The audited information will be included in the City’s Annual Comprehensive Financial Report (ACFR) and will be presented to the City Council once the City’s independent auditor has issued its opinion on the ACFR, and it has been reviewed by the Audit Committee; this is expected to occur in December 2024 or January 2025. If there are any differences in the financial information presented in this report and the ACFR as a result of the audit, those changes will be highlighted at the time the ACFR is presented to the City Council for acceptance. The FY 2023/24 total actual General Fund revenue is $151.8 million, which is 0.7 percent lower compared to the FY 2022/23 actual revenue of $152.7 million, mostly due to one-time, federal stimulus funding from the American Rescue Plan Act of 2021 no longer being available. For recurring revenues, the City’s largest revenue source - property tax - increased by 4.8 percent, while the second largest revenue source - sales tax - decreased by 8.5 percent. On the expenditure side, the FY 2023/24 actual total is $142.5 million, which is 6.7 percent higher compared to the FY 2022/23 actual expenditure of $133.5 million. This increase was mostly due to higher personnel, contract service, utility, and insurance costs. However, it must be noted that the overall actual expenditure total was $5.5 million below the FY 2023/24 expenditure budget of $148.0 million due to staff implementing various cost-saving measures, including freezing of select vacant positions, controlling contract service costs whenever feasible, not starting any new services and programs funded by the General Fund, delaying purchases of non-critical vehicles and equipment, and reducing staff travel and training expenses. For full details on these cost-saving measures, please refer to the City Budget Update agenda report presented to the City Council at its September 17, 2024 meeting. As discussed at the September 17 meeting, the City faces significant fiscal challenges in both the operating and capital budgets as highlighted below. Limited available resources from FY 2023/24 will not be able to address these funding gaps. These fiscal challenges must be continuously addressed going forward, starting with the FY 2025/26 - FY 2026/27 biennial budget development process. • Forecasted General Fund structural deficit: o Insufficient revenues to cover all funding needs o Insufficient funding for many program areas Page 230 of 658