Wrapping up budgets past, present and future

When I submitted my State of the City column this past June, city administration and City Council were looking back at the first half of fiscal year 2010 (Oct. 1, 2009, to Sep. 30, 2010) and planning for FY 2011, which would begin Oct. 1, 2010.
I reported then that the city’s finances were tight but stable and gave much of that credit to a three-year financial plan implemented in FY 2008. Now that we’re three months into the new fiscal year, it seems like a good time to take a look at where we’ve been, where we are and where we’re headed.
Budgets past
When the economy began to tank in 2008, we began three-year projections for the general fund portion of the budget. At about $76 million, this portion of the overall budget is most dependent upon tax dollars. Most of the rest of the $383 million comes from utility revenues. Projections showed that 2012 would be the toughest year and that 2010 and 2011 budgets needed reductions to avoid a fiscal crisis in 2012. We began to curb spending while remaining responsibly focused on delivering core services to citizens.
Our fiscal guiding principles were (and remain):
•    Budget revenues conservatively.
•    Budget expenditures at maximum foreseen exposure, and anticipate actual expenditures at 98 percent.
•    Budget the use of excess reserves to balance the budget. The city has consistently budgeted the use of reserves but has actually reduced reserves only two times in the past 10 years.
The present budget
Going into the 2011 budget, we continued to seek balance between public safety expenditures and other less critical but still important expenditures. There were no increases on taxes or fees, a proposed 3 percent electric utility rate increase was reduced to 2 percent, contingency funds were eliminated, there were no wage increases, travel and training were cut, and there were modest reductions in staff, mostly through attrition.
On Nov. 29, as one of her last official acts, former City Finance Director Lori Fleming delivered a non-audited FY 2010 end-of-year review to the City Council. The final independent audit is currently underway. As with past years, we expect the audit to be completed by the end of January.
The city’s traditional conservative budgeting and spending practices, combined with an unanticipated but welcome 2 percent increase in sales tax revenues, created a better-than-expected result in the general fund for FY 2010.
•    General fund revenues came in 4.3 percent more than actual FY 2009 receipts and $2.3 million (3.2 percent) more than estimated FY 2010 receipts.
•    Sales taxes increased 2 percent over actual FY 2009 and 1.6 percent over estimated FY 2010.
•    Expenditures came in at $633,000 less than department estimates (1 percent less than budget).
•    Personnel costs decreased due to unfilled vacancies in Finance, Fire, Law, Neighborhood Services, Parks and Recreation, Police and Public Safety Joint Communications.
•    City Council sought reductions for printing, food, travel and training and contractual services in every department.

Budgeting for the future
Although our financial picture is better than we expected, we must continue to act conservatively for what could still be a rough budget in FY 2012. Council has requested follow-up information on several items including:
•    Comparisons to revenue sources in other cities;
•    A look at utility debt structures;
•    A report on Animal Control revenues;
•    Information on Police Department vacancies;
•    More detail on year-end encumbrances including purpose and justification;
•    Expectations for FY 2010 sales tax revenue.
Wrapping up
Running a full-service city requires teamwork and vigilance. I want to commend the staff from all departments for their efforts to find new ways to reduce expenses and stretch dollars a little tighter. The City Council deserves recognition for taking thoughtful action on pension and health care issues. Our increasing bus and airport customers also deserve thanks. It is good to see that efforts to improve quality and service are paying off.
The coming year will be one of transitions. A new city manager and a new finance director will be leading the 2012 budget process. Although there is always room for improvement, I believe the city has a good budget system in place and a team of seasoned employees to help keep things on track.
In the past year, we have pushed efforts to preserve the institutional knowledge held by many of our retirement-eligible employees. We are fortunate to have a deep pool of dedicated employees to help ensure that each transition goes as smoothly as possible. Several of our managers and supervisors are actively engaged in the city’s Journey to Excellence, which is based on our commitment to achieving excellence in what we value: customers, communication, integrity, teamwork and resources.
Taking stock of who and what we value sounds like a great way to celebrate the coming New Year.