Loading...
HomeMy WebLinkAboutItem 02 Budget Check InAGENDA ITEM SUMMARY Meeting Date: 11/7/2022 revenue generation strategies to bring back to Council to review in a future work Meeting Type: Work Session ISSUE Staff Contact/Dept.: Nathan Bell/Finance Council with an update on the five-year General Fund forecast and some of the Staff Phone No: 541-726-2364 ATTACHMENTS: Estimated Time: 30 Minutes SPRINGFIELD Council Goals: Provide Financially CITY COUNCIL and the financial challenges the City is facing in the coming budget year and Responsible and beyond. Innovative Government Services ITEM TITLE: BUDGET CHECK-IN ACTION Provide staff with guidance on whether to explore changes to service levels or REQUESTED: revenue generation strategies to bring back to Council to review in a future work session. ISSUE As the City begins the fiscal year 2024 budget process, staff would like to provide STATEMENT: Council with an update on the five-year General Fund forecast and some of the underlying assumptions. ATTACHMENTS: Attachment 1: FY24 Budget Check-in PowerPoint DISCUSSION/ As the City begins its annual budget process in the Fall of each year, staff engages FINANCIAL Council with a conversation on an updated five-year forecast for the General Fund IMPACT: and the financial challenges the City is facing in the coming budget year and beyond. As with previous five-year forecasts, there remains a structural imbalance of revenues not keeping pace with expenditures. Staff has made progress in narrowing that gap through a number of initiatives over the past few years, primarily through reductions in staffing, most recently in FY20 & FY21. However, this has shown itself to be unsustainable, and 9 positions were added back to the budget in FY22 & FY23. These positions are currently funded through ARPA funds. This funding will end on December 31, 2024, and the positions will come back into the General Fund half -way through FY25. These positions, as well the forecasted subsidies to the Ambulance Fund, are the primary drivers of the large deficit spending in the outer years. Staff continue to be proactive in monitoring the condition of the City's General Fund and identifying strategies to address this imbalance. Historically, this has involved staff reductions through restructuring or process improvements. These opportunities are becoming more challenging to find. The other options are service level changes or new revenues. While the infusion of Federal ARPA funds has shored up our finances in the near-term, it is important that we start the conversations on potential solutions to have a plan in place by the end of ARPA funding. SPRINGFIELD c� OREGON General Fund Forecast General Fund Five Year Forecast Total Operating Revenue Operating Expenditures Personal Services Material & Services Capital Outlay Total Operating Expenditures Fiscal Transactions Transfer to Street Fund Transfer to Ambulance Fund Transfer to Development Assessment Capital Fund Total Fiscal Transactions TOTAL Expenditures Current Operating Revenue over Expenditures Beginning Cash Ending Cash FCST FCST FY23 FY24 FCST FCST FCST FY25 FY26 FY27 $ 42,215,811 $ 44,545,130 $ 45,938,080 $ 47,422,855 $ 48,745,984 34,269,811 35,907,691 37,909,696 39,739,505 40,665,669 7,512,878 8,029,074 8,374,237 8,643,464 8,920,768 94,300 100,000 100,000 100,000 100,000 41,876,989 44,036,765 46,383,933 48,482,969 49,686,438 471,000 501,816 516,870 532,377 548,348 250,535 693,274 822,130 1,056,916 1,055,941 56,312 56,312 56,312 56,312 56,312 777,847 1,251,402 1,395,312 1,645,605 1,660,601 42,654,836 45,288,167 47,779,245 50,128,574 51,347,039 (439,025) (743,037) (1,841,166) (2,705,718) (2,601,055) 10,336,767 9,897,742 9,154,705 7,313,539 4,607,821 $ 9,897,742 $ 9,154,705 $ 7,313,539 $ 4,607,821 $ 2,006,766 Ending Cash as a Percent of Operating Expenditures 24% 21% 16% 10% 4% Attachment 1 Page 2 of 6 SPRINGFIELD 11L, OREGON Assumptions Revenue • Baseline assessed value (AV) growth — 3% per year • AV growth including Marcola Meadows and Enterprise Zone expiration — 4% to 5.5% • Average revenue growth across all accounts — 3.2% Expenditures • COLA assumptions for labor costs do not reflect current inflationary environment — 3% average across all labor groups • Materials and services is assumed to increase 5% in FY24, 4% in FY25, and 3% in FY26-27 • Underspend - $800K per year • Jail Medical contract increase - $200K of 600K per year increase covered by General Fund Attachment 1 Page 3 of 6 SPRINGFIELD 11L, � OREGON ARPA Funded Critical Positions Fire Inspector (FLS) —fulfill IGA required position EMS/Fire Instructor (FLS) —fulfill IGA required position Deputy Police Chief (POL) —increase leadership capacity Human Resource Specialist (HR) —support recruitment activities Training Coordinator (HR) —support training and development Legislative & EcDev Analyst (CMO) —support legislative and economic development activities Senior Planner (DPW) —support unfunded state mandates Programmer Analyst (IT) improvements software support and process Attachment 1 Page 4 of 6 SPRINGFIELD 11L, OREGON Considerations • Inflation — cost of labor, material, and services • Recession — impact on current and planned developments • Telework — commercial vacancies • Ambulance Fund — revenues not keeping pace with expenditures • Jail Medical expense — percentage of recovery through agency lease contracts • City facilities maintenance/replacement — not saving for future facilities needs Attachment 1 Page 5 of 6 t i r ri