2004 Performance Based Budget - Laserfiche WebLink

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CAPITAL IMPROVEMENT PLAN INTRODUCTION The City of South Bend is facing the same key issues that many other entities our size across the nation are facing. That is, how to meet the daily needs of its customers from an operational standpoint; while at the same time, how to allocate resources to a long list of very critical capital needs. The list of capital expenditures that need to be done is endless and, when combined with the list of capital expenditures that should be done, is staggering. Our responsibility to maintain what we have been given, and to pass it on in better shape than it was when we received it, is a sacred trust. That responsibility must be balanced with the ongoing responsibility of keeping the organization financially sound. That important balance is being addressed through the help of two recent changes, one in the form of the City's budgeting procedures (described below), the other in the form of additional resources available to the City. As mentioned in the Executive Summary found in Section A, within the past several years the City has passed various ordinances that have provided for much needed additional resources in the form of County Option Income Taxes (COIT) and Economic Development Income Taxes (EDIT). These new taxes have and will continue to provide a new and expanded source of funds for capital needs. These new sources of revenue will begin to take the pressure off of the General Fund as the primary source of funding for citywide capital expenditures. In other words, it allows the City to shift part of the financial burden away from the property taxpayer by establishing other sources of revenue. POLICY AND PROCEDURES The City's operating and capital budgets are prepared and approved at separate times of the year. It has been the City's policy for the past several years to separate these budgets for two reasons. First, it ensures that each department or fund is operating with a surplus budget, which is when anticipated revenues exceed budgeted expenditures. This demonstrates that current operational costs are being funded through revenue collected during that same period. Second, it allows the City to prepare a separate consolidated capital budget for Council adoption after they understand the operational needs of each department or fund. The timing of that adoption and the determination of the resources available to fund the capital plans are the two key components of this policy. The 2004 Capital Budget was presented to the Common Council in February 2004 after the City knew its actual year-end 2003 financial position. The available resources for the City's 2004 Capital Budget were determined by taking each fund's year-end cash balance and adjusting this balance for current receivables and outstanding payables. After determining the adjusted year-end cash balance, a minimum cash reserve balance of between 7.5% and 25% was further subtracted from this balance. The resulting "excess," after the reserve requirement was met and other miscellaneous reserves were established, was deemed available for capital expenditures for the current year. This calculation for 2004 can be found immediately following this introduction. D-1