Report to Mayor and City Council
Tuesday, March 20, 2018
Discussion
SUBJECT:
Title
FISCAL YEAR 2018-19 BUDGET WORKSHOP #1 - BUDGET POLICY ISSUES (CITY COUNCIL)
Body
I. SUMMARY
This is the first of three planned budget workshops, prior to a public hearing in June 2018 to consider adoption of the proposed FY18-19 budget. Initial draft budgets have been received from the departments. One purpose of tonight's workshop is to receive direction from City Council on the proposals that would change the current budget structure.
The City has an ongoing General Fund budget deficit. The new Oil Industry Business License tax is expected to generate at least $3.2 million for FY18-19, based on information received to date. Collection of the tax began in January 2018, and the City is still in a stage of discovery. The estimated revenue may grow as additional information becomes available, or when audits are conducted. Using the minimum estimate for now, the FY18-19 General Fund deficit may be about $3.7 million without further changes to the budget structure.
* Sales Tax (one-third of General Fund revenue) is expected to decrease slightly due to expected cooling off for auto sales.
* Property Tax (one-fifth of General Fund revenue) is expected to increase by 2% for most parcels and decrease for the oil refineries.
* Employee compensation (one-half of General Fund expenditures) is expected to increase by 2.5% ($0.9 million) for the City's pension contribution alone. That does not include any potential wage increases.
* The Sheriff contract for law enforcement (one-quarter of General Fund expenditures) will increase by 3.0% overall based upon the same number of service units.
Although the City's General Fund Reserve for Economic Uncertainties is nearly fully funded, the City is not prepared for the next recession. The structural budget deficit has not yet been cured; and the City's major revenue sources are not increasing as fast as expenditures. Funding for infrast...
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