WS 11-15-2010 - Laserfiche WebLink

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Closely linked to managing a 0% tax levy is my proposed strategy for the Capital Replacement Program, (Fleet, Non-Fleet, and Pavement Management budgets). As of July 2010, the Finance Department calculated that the City's General Fund balance had $1,100,000 above the necessary amount for cash flow, per the Fund Balance Policy's targeted balance. In previous budget discussions I have referred to this sum of money as the fund balance target surplus or FBTS money. The Council has a rare opportunity infuse the $1,100,000 into Fleet and Non-Fleet. This eliminates the need to increase Fleet and Non-Fleet funding in the operating budget and assists in maintaining a 0% tax levy while dedicating dollars that are currently not dedicated for a particular use. FBTS Money, Redirection of PSC Debt Levy and Use of Equipment Certificates to Fund Fleet and Non-Fleet Capital Replacement and Pavement Management Programs Dedication of the existing dollars residing in the General Fund will become increasingly important. As the State of Minnesota gears up to consider its options for addressing their $6 billion budget deficit, city fund balances could be tapped as a source of revenue to close the State's budget gaps. This was talked about in the 1980's and the 1990's and is being talked about again. Regardless of the State's actions, it is my recommendation to move the FBTS money from the General Fund into the Fleet & Non-Fleet budgets simply because it makes good long-term sense from a financial planning perspective. Other efforts can be made in the name of good long-term financial planning. Such efforts would be to make a policy commitment that when the debt service for the Public Safety building is retired in 2016 (last tax levy is 2015) that the dollars be redirected into the Fleet and Non-Fleet Budgets. Again this will not require a tax increase, but will redirect existing resources to address capital needs. Equipment certificates (EC) are a form of short-term debt that the City could use to finance large equipment acquisitions. While I don't consider the use of EC to be an ideal source of financing it can help with cash flows. Future attempts should continue to be made to finance Fleet, Non-Fleet and Pavement Management with cash, reducing the need to borrow and incur more debt. Staff has extracted all paved surfaces (such as parking lots and trails) out of the Non- Fleet Budget and is now tracking those assets in what staff is calling the Pavement Management Budget and is assigning MSA dollars to that budget. This effort will tighten up the City's budget with regards to paving areas of the City that we typically don't assess reconstruction costs. Finance staff has been directed to forecast Fleet and Non-Fleet budgets assuming the influx of FBTS money, the redirecting of the Public Safety Center debt portion of the tax levy and targeting specific assets for financing with short-term equipment certificates.