Minutes 05/02/1989 - Laserfiche WebLink

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M~a~v 2, 1989 Since our fund balance is now at a level of $6,035,409, I have'prepared this budget on the basis of'no further utilization. Even though in previous years I have recommended using a portion of it as a preferable alternative to tax increases or service reductions, I have repeatedly pointed out that.this funding source is ,not~a recurring revenne and would suffice only as a temporary measure. In the interest of fiscal responsibility, I do not feel that we should use any fdrther portion of~ the fund balance. Such a figure.represents 3~of theiproposed budget to be used as working capital. The~Municipal Finance Commission has consistently recommended we attempt to maintain this percentage at 5%. The fund balance is necessary not only as a reserve for emergencies, but also, as our source of working capital. It is at its highest point at the end of each fiscal year when personal property taxes are due June 30th. During the-course of the year, expenditures take place before revenues are received. The following chart illustrates a typical year's~cas~ flow: CAS~ ?LO~~ Prior to 1982, it was the C~ty's practice to borrow through revenue anticipation notes from banks in order to ha-ye s~ficient cash to meet expenditures throughout the year.. It has not been necessary to borrow operating cash since 1982 secause- of the larger, fund balSnces that have been available. We-may. be able to avoid sorrowing]this fiscal year, but it appears that we will nee( to borrow relatively small amounts during periods of next fiscal year., For example, in the preceding cash f-tow 'illustration, our borrowing periods would be February, April and May. Any further Utilization of ~he fund balance will requ'ire the Ci~t~ to borrow more. _ The presen~ year's budget included ~he utilization of $3,341,254 of t~e fund balance. In other words, appropriations exce~d~d the estimated revenues by that amount in the 1988-89 budget, and revenues must be increased an~/or expenditures reduce( by that amount in the proposed budget for 1989-90. Rather than making up that full amount by revenue increases alone., or by expenditure red~ctions alone, my budget strategy has seen to recommend a combination of revenue increases and expenditure reductions.