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AI- 3567   11.    
City Council Agenda
Meeting Date: 03/19/2013  
Subject:    Allocation of 2012 Tier 2 Funding for spending in 2013
Presenter: Cliff Craig
Department: Finance Department  

Recommended Action
Allocate 100% of new Tier 2 funds from the 2012 budget available for spending in 2013 to be transferred to the Street Fund.

The Council's Budget Stability Policy dictates a procedure for budgeting revenues to ensure a consistent provision of an affordable level of services. The policy requires that core general fund program expenditures be restricted to the lower revenues by line item of the last two completed fiscal years. When additional funds are available, the second level of funding is for operating capital--primarily street maintenance, equipment replacement and information technology replacement funds. These items normally require about $2 million per year for full funding. Any additional funds above this, Tier 3 funding,  would then be allocated toward increasing fund balance, paying down debt and funding capital projects per Council direction.

At the time this agenda item was prepared, the best estimate is that between $150,000 and $450,000 from the 2012 budget may be available for Tier 2 funding.

Previous Actions (Discussions/Presentations)
The 2012 budget was developed according to the procedure defined in the Budget Stability Policy. The policy requires the City Manager to obtain Council direction regarding how to use available Tier 2 funds when the full amount is not realized, or to determine uses for any available Tier 3 funding.
Summary of Proposal
This recommendation would transfer all of the additional Tier 2 funding generated in 2012 to the street fund, or to any other use directed by Council. Staff will prepare a budget change consistent with Council direction for the next budget adjustment ordinance.

An estimated balance of $100,000 in the budget stability reserves which were budgeted in 2012 is expected to remain unspent. The City Manager will provide a recommendation with respect to this remaining balance at a later date.
This is unrestricted funding and Council may choose to use it for any legal purpose; however, the budget stability policy directs it toward necessary operating capital. Street maintenance is one example.

Equipment replacement or computer replacement would also be uses consistent with this policy.

Council could also choose to retain this amount in fund balance, or use some of all of it to pay down interfund debt.

All of these options are consistent with "one time" purposes that do not increase ongoing operating costs.

Fiscal Impact
No file(s) attached.

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