Discussion:
Each year the City's General Fund is reviewed as part of the closing process as we near the fieldwork portion of our annual audit.
The General Fund has an estimated unassigned fund balance of $22.7 million as of December 31, 2023. At this time it is an estimate only, because it is unaudited. The fieldwork portion of our audit begins on April 15. It is not anticipated that there will be any major changes to the fund balance. Based on the policy of maintaining a 50 percent fund balance (of budgeted expenditures), the General Fund will end the year with a $4.28 million surplus.
In the past, any excess fund balance has been directed towards one-time events such as capital improvements. Staff is requesting General Fund transfers of $348,650 to the 2022A GO Improvement Bond Fund, a transfer of $3.7 million to the Capital Improvements Fund, and the assignment of $200,000 of fund balance for public safety costs.
The $348,650 transfer to the 2022A GO Improvement Bond fund will effectively allow the City to reduce the 2025 debt service tax levy by an equivalent amount. The debt service levy was reduced similarly in 2024 by the transfer of $226,000.
The $3.7 million transfer to the Capital Improvements Fund would provide much needed funding upcoming 2025 street and infrastructure projects. At the capital improvement work session during the budget process the possibility of issuing bonds to finance the 2025/2026 street projects was discussed. These one time funds would be a great way to bridge that funding gap and delay/avoid a debt issuance for these projects. Absent the one time funding, these costs will need to be levied (whether it's through a capital levy or debt service levy).
The $200,000 assignment of fund balance for public safety costs will set aside these funds to be used at the City Council's discretion for public safety costs or re-purposed for other needs determined by the council. The City currently has two police union contracts that have remained unsettled for 2024 and is in the process of transitioning from a paid on-call fire staffing model. The funds would be available for these purposes through the end of 2024, if needed. Funds not utilized in 2024 will once again become unassigned at the end of the year.