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Attachment D REQUEST FOR COUNCIL ACTION Date:08/27/12 Item No.: Department ApprovalCity Manager Approval Item Description:Conduct a Hearing to Solicit Comment on the 2013 City Manager Recommended Budget B ACKGROUND 1 Last year, the City Council adopted a 2-year budget for the 2012 and 2013 fiscal years. At that time, it was 2 noted that State Statute requires cities to formally adopt a budget on an annual basis. As a result the 2013 3 portion of the Budget adopted by the Council last year essentially servesas a preliminary budgetand 4 planning tool in conjunction with other long-term goal setting and strategic planning processes. 5 6 Over the past several weeks, City Staff has been reviewing current budget inputs,financial trends and 7 service-level requirements to determine whether the preliminary 2013 Budget requires any modifications. 8 The current 2012/2013 Budget by Major Program is included in AttachmentsAand B.A Fund-by-Fund 9 comparison is included in Attachment C. 10 11 It should be noted that the preliminary 2013 Budget included a number of assumptions. They include: 12 13 2% cost-of-living-adjustment (COLA) for all employees 14 5% increase in the healthcare premiums paid by the City 15 2.0% -2.5% increase in supplies, maintenance, professional services, and most other expense 16 categories 17 Non-tax revenues for the property tax-supported programs were expected to remain stagnantor, as 18 in the case of interest earnings, to decline. 19 20 It was further assumed that the presence of a 2-year budget allowedadded flexibility when it comes to 21 capitalizing on favorable purchasing environments, or responding to unforeseen circumstances. For 22 example, operational savings in year 1 could be used to fund higher-than-expected costs in year 2. 23 Similarly, if the City experienced higher-than-expected costs in year 1, it would then forgo some 24 discretionary items in year 2 to make up for it. 25 26 The preliminary 2013 Budget for the property tax-supported programs called for an overall increase of 27 2.3%. Based on the assumptionsnoted above, the vast majority of the program budgets adopted last year 28 will be sufficient to meet 2013 operational needs. However, there are a few areas that will require an 29 adjustment. Those adjustments are shown below. 30 31 Page 1of 4