CITY COUNCIL MEETING AGENDA PACKET

Page 3 of 17 reserves amounted to $310,000. Actual expenditures were $12.0 million or 7.7 percent more than the amended budget. Higher revenues and expenditures were primarily attributed to the $12.8 million in other financing sources (revenues) and capital outlay (expenditures) associated with the Costco project in the Johnson Drive Economic Development Zone; as revenues are offset by expenditures, these financial activities have no net impact on the bottom line. A detailed explanation of the amended budget versus actuals is included in Tables 2, 3, 4, and 5 in this Report. It should be noted that any investment gain or loss is not realized (i.e., not available as a budgetary resource), as the City intends to hold its securities until maturity and may sell securities before maturity to rebalance the portfolio and achieve more favorable returns over time. However, the Governmental Accounting Standards Board (GASB) requires reporting of unrealized investment or fair market value adjustment in the ACFR. The City budgets revenues and expenditures conservatively to ensure resources are available to cover expenditures, as a significant portion of the City’s General Fund revenue (property tax and business license tax) is received between December and June each fiscal year. For example, property tax accounts for over 50.0 percent of the General Fund revenue, and over 75.0 percent of property tax is collected in the months of December and April. As a result, revenues must be budgeted carefully to ensure sufficient cash inflows to cover expenditures/cash outflows. Notably, the City’s fiscal policies and practices impact borrowing costs for debt financing. In addition to financial results, rating agencies favorably view proactive long-term financial planning and conservative budgeting practices. The City aims to implement best practices in its financial management. While a balanced budget is required to be achieved every year, like other agencies, many critical funding needs are omitted from the budget due to limited resources. As such, when one-time resources become available, some of the funding gaps are reduced/filled to reduce future financial burden or mitigate risks and/or impacts to the organization and community. For FY 2024/25, staff recommends allocating available one-time resources toward funds with inadequate fund balances, after retaining sufficient funds to maintain the 20.0 percent General Fund reserve. Page 349 of 399