Item 3: Adoption of Resolution 5019 Adopting a Supplemental Budget

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Shortfall upon approval. After this Supplemental Budget, there will be a total of $13,749,360 in Reserve for Revenue Shortfall, which represents 11.9% of FY11 adopted operating expenditures. This reserve balance will aid the organization in weathering the revenue shortfalls in the current year, and the uncertainty around the City’s future economic condition. A full list of General Fund reappropriations and other uses of MBWC is attached. This Supplemental Budget reflects the following Budget Committee motions passed in May 2010:  $900,000 general capital transfer, of which $300,000 will be dedicated to development of Creekside Park  $200,000 to the Public Works enhanced pothole program  $100,000 of unpsent downsizing costs to be used for the Human Services Commission Capital Carryover The Capital Project Carryover Reconciliation also occurs in this Supplemental Budget. An estimate of the unspent balance in each capital project was established in the FY11 Annual Budget. These estimates have been reconciled with actual FY10 expenditures and the Capital Budget is adjusted to reflect the remaining unspent balances in each project. The Capital Carryover on this SB totals $6,682,867. Recognition of Grants There are transactions on this Supplemental Budget that recognize new or expected revenues, primarily from grants and other agencies, and increase the operating and capital budgets. In some cases, capital project support from other governments for ongoing projects is put into Balance Available because the project is currently budgeted and the fund is being reimbursed for a share of the costs already appropriated or incurred. Grants that are received over a period of more than one fiscal year have their appropriation balances and revenues re-budgeted in the current fiscal year. In the General Fund, grant revenues totaling $1,950,403 are appropriated to departments. Details are included in the attachment. Non-General Fund Transactions This supplemental budget recognizes $15.4 million in non-general fund transactions, other than MBWC, encumbrances and capital carryover reconciliation. Most of this total is reflected in recognizing and re- budgeting 11.7 million in grants and other agency revenue. This Supplemental Budget also recognizes $225,000 of revenue from current tenants in the Country Club road facility for operations and maintenance due prior to the tenants vacating the building and commencement of construction. Other non-general fund transactions are detailed in the attachment. Timing In some cases, expenditure authority is needed immediately to carry out council direction or to meet legal or program requirements. Approval of Supplemental Budget #1 in December allows the organization to prepare more accurate mid-year projections by having the general ledger reflect the audited balances in each fund. This, in turn, enables staff to more accurately project the Beginning Working Capital for the next year’s Proposed Budget. RELATED CITY POLICIES These transactions conform to the City’s Financial Management Goals and Policies. Z:\CMO\2010 Council Agendas\M101213\S1012133.doc