MEMO TO: Members of the City Council
FROM: Mayor John Marchione
SUBJECT:
title
Adoption of an Ordinance Amending Ordinance No. 2943 by Making Adjustments to the City’s 2019-2020 Biennial Budget
a. ORDINANCE NO. 2972: An Ordinance Amending Ordinance No. 2943, by Making Adjustments to the City’s 2019-2020 Biennial Budget, in Exhibit 1
I. RECOMMENDED ACTION
recommendation
Adopt the proposed ordinance amending the 2019-2020 Biennial Budget. The effect of this adjustment is to: Recognize the difference between actual and budgeted beginning fund balances to support City activities; provide additional appropriation and interfund transfers to support the purchase of a parcel of land; provide for new grant revenue; and move the salary and benefit budget associated with five existing positions from the General Fund to the Information Technology Fund to implement departmental reorganizations.
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II. DEPARTMENT CONTACTS
Malisa Files, Finance Director 425-556-2166
Kelley Cochran, Deputy Finance Director 425-556-2748
Marissa Flynn, Senior Financial Analyst 425-556-2186
III. DESCRIPTION/BACKGROUND
Periodically the Finance Department adjusts the budget to recognize revenue and expenditure changes during the biennium. At the beginning of each new budget year, Financial Planning reconciles the budgeted beginning fund balances and the actual beginning fund balances for each fund so that fund managers know how much actual cash they carried over into the new biennium. These adjustments can either increase or decrease each of the City’s budgeted funds as shown in Exhibit 1. Most of the changes in this budget adjustment result from the beginning fund balance reconciliation while the others are either minor housekeeping changes or items previously approved by Council. The details of each adjustment are outlined below.
Adjust Budgeted Beginning Fund Balances - $17,198,207
The adjustment would formally recognize the difference between the actual and budgeted beginning fund balance in the General Fund, sub-funds of the General Fund, Special Revenue, Debt Service, Capital Investment, Enterprise Operating, Enterprise Capital Investment and Internal Service Funds. It is important to note that this adjustment only affects the General Fund to the extent needed to fund the purchase of a parcel of land in the amount of $5.3 million, though the General Fund ended the biennium with a total of $20.6 million, $15.3 million more than what was anticipated during budget preparation. Of the $20.6 million, $8.9 million anticipated in the budget and was allocated to support the City’s contingencies. The additional revenue received was primarily due to greater than anticipated one-time revenues including sales tax on construction (approximately $13.9 million), as discussed with Council throughout the year. An additional portion was related to savings due to employee vacancies and line-item savings ($2.8 million)
Higher than anticipated revenues and the timing of projects affected other funds, including:
• The Real Estate Excise Tax Fund which received $2.1 million over anticipated.
• The Parks Project Maintenance Fund transfers were higher than planned and expenditures were lower than budgeted resulting in a higher ending fund balance of $1.1 million.
• Capital Replacement Reserve Fund expenditures were lower than anticipated due to a change in the timeline for the Police Department CAD replacement ($2.5 million).
• The Development Review Fund expenditures were lower than anticipated due to the timing of development projects, resulting in a higher than anticipated ending fund balance ($2.0 million).
General Fund (Fund 100) - (1,306,716)
Move the salary and benefit budget associated with five existing positions from the General Fund to the Information Technology Fund in accordance with departmental reorganizations.
Real Property Purchase (Fund 031) - $5,300,000
Move beginning fund balance from the General Fund to the Real Property Fund to fund the purchase of a parcel of land.
Transportation Capital Project (Fund 316) - 1,500,000
Provide for grant funding from the Washington State Transportation Improvement Board for the 51st Street Improvements Project as approved by Council on February 5, 2019.
Information Technology (Fund 520) - $1,306,716
Move the salary and benefit budget associated with five existing positions from the General Fund to the Information Technology Fund in accordance with departmental reorganizations, as explained above.
IV. PREVIOUS DISCUSSIONS HELD
This item was discussed at the July 23, 2019, Finance, Administration and Communications Committee of the Whole meeting.
V. IMPACT
A. Service/Delivery:
None
B. Fiscal Note:
Adoption of this ordinance will increase the City’s 2019-2020 Biennial Budget by $23,998,207 to a total of $821,670,414, as shown in Exhibit 1 of the Ordinance (see Attachment A).
VI. ALTERNATIVES TO STAFF RECOMMENDATION
1. Adopt the ordinance as proposed.
2. Adopt with modifications recommended by Council.
3. Do not adopt the ordinance. The adjustments to the proposed funds will not be initiated.
VII. TIME CONSTRAINTS
The budget adjustment is necessary to align City financial records with decisions made by the Council and sync anticipated revenues with actual results.
VIII. LIST OF ATTACHMENTS
Attachment A: Ordinance: 2019-2020 Budget Adjustment
Exhibit 1: Summary of 2019-2020 Budget Adjustments