Item 3: Resolution on Supplemental Budget

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing and Action: Adoption of a Resolution Adopting a Supplemental Budget; Making Appropriations for the City of Eugene for the Fiscal Year Beginning July 1, 2011 and Ending June 30, 2012 Meeting Date: December 12, 2011 Agenda Item Number: 3 Department: Central Services Staff Contact: Mia Cariaga www.eugene-or.gov Contact Telephone Number: (541) 682-5408 ISSUE STATEMENT City Council approval of the first Supplemental Budget (SB1) for FY12 is requested. Oregon Local Budget Law (ORS 294.480) allows for supplemental budgets for "an occurrence...which had not been ascertained at the time of the preparation of a budget for the current year..." This Supplemental Budget does not authorize any increased property tax levy and has been advertised in compliance with Oregon statute. BACKGROUND The Supplemental Budget that occurs in December of a fiscal year is usually the largest because of audit adjustments to budgeted Beginning Working Capital and the reappropriation of funds from the prior fiscal year for program initiatives or projects begun, but not completed, in that year. Supplemental Budgets also recognize new revenue and authorize other unanticipated changes in legal appropriations. Transactions Related to Beginning Working Capital Isler & Company, LLC, the City's external auditor, has completed its FY11 audit and this Supplemental Budget reflects Marginal Beginning Working Capital (MBWC) information. The MBWC is the difference between the estimated and audited actual FY11 revenues and expenditures. This adjustment is recognized on SB1 and is the largest component of the transactions included in the budget request. General Fund Main Sub-Fund Transactions on SB1 After taking into account the reconciliation of the prior year encumbrance reserve, there is $5,109,017 available to be appropriated or put into reserves in the General Fund on SB1. From that amount, the City Manager is recommending $3,213,616 be appropriated for various uses as described in the SB1 Transaction Summary (Attachment A). The City Manager’s recommendations for use of MBWC in the General Fund reflect the motions passed by the Budget Committee and the City Council in May and June of this year. The City Manager is recommending that the remaining $1,895,401 be placed in the Reserve for Revenue Shortfall. After this Supplemental Budget, there will be a total of $9,841,039 in the Reserve for Revenue Shortfall, which represents 8.1 percent of the FY12 adopted operating expenditures. This represents a decline in the Reserve for Revenue Shortfall of approximately $3.9 million from the end of the previous fiscal year. This reserve balance will assist the organization in weathering the revenue S:\CMO\2011 Council Agendas\M111212\S1112123.doc