2004 Performance Based Budget - Laserfiche WebLink

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FIVE YEAR FINANCIAL FORECAST The City's five-year financial forecast includes as its first year the actua12004 Budget. The objective of the financial forecast is to provide a frame of reference for evaluating the City's financial condition, and it is used as a basis for decision making. The forecast was developed using a baseline environment; that is, revenues and expenditures were projected based primarily on growth patterns or inflation factors assuming the present level of services provided by the City. Anticipated inflation and historical growth rates are used to predict expenditure patterns, while revenues are projected by trend or by specific circumstances as each case may warrant. It is important to stress that the general assumption used when developing this forecast was that the services currently provided, as budgeted in the year 2004, will continue to be provided at the same level for the following four years. As needs change over time, service levels will also change; thus, future budgets may not necessarily reflect this assumption. As mentioned earlier in this document, the City takes a conservative approach when preparing operating budgets. Anticipated revenue has generally been underestimated for budget purposes, and expenditure budgets have been underspent. This conservative approach is not just limited to the General Fund. A quick look at the past three years will bear this out. Actual revenue collected citywide was over the estimated revenue budgeted for 2003, 2002 and 2001 by $8.9 million (5.9% of original budget), $12.1 million (8.1%) and $7.5 million (5.5%), respectively. Total citywide budgeted expenditures were underspent by $7.7 million (4.7% of original budget), $13.5 million (7.4%) and $8.8 million (5.7%) for the 2003, 2002 and 2001, respectively. The multi-year forecast included in this section has been prepared using the same conservative approach embedded in the budgeting process. The City prepares its annual capital budget during a separate process after the annual operating budget is prepared and approved (as more fully explained in Section D). As a result of this capital budgeting policy, these forecasts do not include specific capital expenditures beyond the year 2004. In keeping with the overriding theory behind appropriating dollars for capital projects based upon funds on hand, only operating expenditures are forecasted with the net operating surplus identified as funds available for future capital projects. Over the five-year forecast period, the City's revenue and expenditures are projected to maintain fairly constant growth patterns. The following information provides the general assumptions that were used in preparing the multi-year forecast: REVENUE ASSUMPTIONS: • Property Tax Levies - increase the maximum 5% per year • Auto and Commercial Vehicle Excise Taxes - 1 % increase per year • Payment in Lieu of Taxes - 2.5% increase per year • Local Option Income Taxes - 2% increase per year (in addition to the scheduled COIT rate increase of one tenth of one percent that will affect revenue received in 2002). No additional local option income tax rate increases have been included that have not already been approved by the County Income Tax Council. • State Pension Relief Funds -includes the assumption that the amount to be received by B-40