Staff will present, answer questions, and receive input from the City Council on the FY2023 City Manager’s Recommended Budget and five-year FY2023-2027 Capital Improvement Program (CIP). Council discussion and feedback will be used to make any required modifications prior to presenting the Tentative Budget and preparing required publications for final adoption of the FY2023 budget. The City Manager’s Recommended Budget for FY2023 is $480.4 million. (Ryan Bittle, Finance Manager, Doug Sandstrom, Finance Director)

This is an informational step in building the FY2023 budget.  As proposed this budget complies with Council adopted financial policies that provide for fiscal conservatism, flexibility, and adherence to legal requirements and professional practices.  Property tax levies and rates are within legal limits for the levy and the combined rate is below the maximum established in the adopted financial policies.
 

This recommended budget is built around the core financial policies previously adopted by council. The budget maintains current programs and services to an expanding population base and addresses the highest priorities expressed by City Council including public safety, sustainability, prudent financial stewardship, compensating employees fairly, providing capacity to absorb capital cost increases and actively pursuing economic development opportunities while maintaining a focus on investing in infrastructure through our capital improvement plan.   As presented the recommended budget retains all base budget programs and adds $9.1 million in ongoing supplementals, 62.04 new full-time equivalent (FTE) positions, plus $9.5 million in one-time supplementals.  The overall FY2023 budget reflects an increase of 8% over the FY2022 revised budget when adjusted for carryovers, contingencies, CFD's, and trust funds.
 

An overview of the FY2023 City Manager's Recommended Budget was presented to council at a work session on April 18th.

The FY2023 budget process began in calendar year 2021 and included departments submitting their initial list of new capital projects, preparing base budget estimates, preparing supplemental addition requests and updating existing CIP project costs and timelines as needed.  All of these estimates and requests are reviewed by Budget and Research and with the executive team.  In the case of capital projects; Engineering Project Management, Information Technology, and Procurement are highly involved in reviews to ensure that all elements of a project are captured within its scope/budget and that we have the organizational resources to deliver the projects proposed.  Council provided their initial FY2023 budget priorities in October 2021 at a retreat and these discussions were utilized in the development of this recommended budget. The first formal step in this budget process with City Council was the presentation of the five-year General Fund forecast on February 7th, 2022. That forecast served as the basis for this recommended budget. On March 28, 2022, City Council approved the only change to our financial policy which was to increase our portion of construction sales tax treated as ongoing revenue from $5.6 million to $6.1 million.  This policy calls for annual review and the $6.1 million was based on the average of the lowest five-years in the prior ten of General Fund construction sales tax collections.  

The proposed budget complies with financial policies and General Fund resources exceed proposed uses by $23.9 million which as presented will be programmed as CIP Reserves for use in future fiscal years of our fully funded five-year CIP when the tentative budget is presented for adoption in May.