Council's Decisions About the Fund Balance

There has been much discussion and some misunderstanding of the Council’s recent decisions about how to allocate the fund balance from the fiscal year that ended June 30, 2013 (FY 13).  While some have thought of this money as “surplus,” in my mind we have those funds to allocate in part because of many important items that we kept out of the budget precisely to ensure that our budget would balance.

Typically, the Mayor’s proposed budget includes a fund balance of $1M to $2M because actual revenues and expenses always differ from budgeted revenue and expenses.  The fund balance is meant to  cover unanticipated costs or declines in projected revenues, so that the budget will balance at the end of the fiscal year.  You can find the FY 13 and FY 14 Adopted Budgets here.

Given the challenges posed by the downturn in the economy in recent years, Mayor Gray’s proposed budgets, and the budgets finally approved by Council, have been lean and conservative. One necessary strategy has been to postpone the purchase of replacement vehicles and other equipment purchases, and to do only the most urgent repairs and maintenance for buildings and grounds.

The combination of a conservative budget, good financial management practices, and a slight improvement in the economy resulted in a fund balance at the end of FY 2013 of approximately $12.5 million.  Council made preliminary decisions about ways to allocate a portion of this balance in the April 23rd and June 11th Budget Committee meetings.

The Administration and individual Councilmembers then presented additional recommendations for the use of the remaining unallocated funds.  The Council discussed these recommendations at the August Committee meeting and  several meetings in October (10/1, 10/10, 10/15, 10/22, and 10/22).

At one point, a motion was made that each Councilmember have $250,000 (for a total of $3.75M) to allocate for needed capital projects in the district he or she represents.  That motion was later amended to reduce the total proposed allocation for district capital projects from $3.75M to $2.25M, and to remove the district-by-district allocation. At a later point Council tabled the amended recommendation.  It was not included in the final set of decisions about fund allocation.

At the conclusion of these extensive discussion the Council allocated funds in the following ways:

  • a number of different contingency/reserve funds to be held rather than spent at this time;
  • a number of items required by good fiscal management/accounting practices;
  • needed replacement of vehicles and equipment, primarily for police and fire;
  • needed building repairs and improvements;
  • specific and general funds for economic development;
  • bike and pedestrian trails and lanes;
  • improvements to a number of parks.

The process took a fair amount of time, given the many legitimate uses for these funds and the sometimes competing views about the best allocation.  At the end, I believe Council has been thoughtful and fair in its final decisions about the allocation of these funds.  You can read articles with more details about the process here, here, here, and here.

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