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ITEM #: 9.
DATE: 05/20/2024

AI #:1783
CITY COUNCIL ACTION REPORT
 
SUBJECT: FY2025 FINANCIAL POLICIES
 
STAFF PRESENTER(S): Ryan Bittle, Finance Manager

SUMMARY

Each year, the City Council adopts Financial Policies that guide budget development and financial practices. As proposed, there is a single change to the existing Financial Policies to increase the amount of construction sales tax that will be recognized as ongoing from $6.5 million to $7.2 million. All other policies are unchanged.

STRATEGIC PLAN ALIGNMENT

     

RECOMMENDATION

Adopt the FY2025 Financial Policies. (Ryan Bittle, Finance Manager)

FISCAL IMPACT

These policies guided development of the FY2025 budget. The recommended action will reclassify or shift an additional $700,000 of Construction Sales Tax to ongoing status in the General Fund. Whether the change in the amount allocated to ongoing General Fund is approved or not, the total Construction Sales Tax revenue estimated is unchanged.

BACKGROUND AND PREVIOUS ACTIONS

The Financial Policies are adopted annually with the last update approved by City Council in May 2023. The proposed revision was discussed at a City Council Retreat held in January as part of the FY2024 and FY2025 update and five-year General Fund forecast.

STAFF ANALYSIS

The adopted financial policies call for an annual review of the portion of General Fund Construction Sales Tax allocated to ongoing purposes. The analysis of revenue for the most recent ten years as shown below has been used to assess the base level of Construction Sales Tax revenue that would persist through an economic trough to support ongoing operations. Using the lowest of these measures sets the ongoing portion of Construction Sales Tax at $7.2 million. This is the same basis used since the policy was adopted in the FY2020 Budget. The General Fund forecast estimates Construction Sales Tax revenue to exceed $24.4 million per year through FY2029.


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