Title
Staff Report for 2012-13 Year-End General Fund Balance
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council designate the unbudgeted year-end General Fund surplus of $3.2 million to the economic contingency reserve to mitigate the impact of unforeseen events in the City.
BACKGROUND
The City Council reviewed the 2012-13 year-end report on October 21, 2013. Unaudited results indicate a $3.2 million increase to the General Fund undesignated fund balance as compared to the original estimate of a $1.0 million shortfall. Economic conditions indicate recovery despite 8.9% statewide unemployment. Statewide median single family home price is $441,000, an increase of 28% over the prior year. San Leandro's fiscal conditions have improved over original projections, the City's unemployment rate is 7.4% and the median home price is $400,000, a 32% increase over the prior year according to Trulia.com. Lower mortgage rates have spurred investments in housing. Lower interest rates have also boosted purchases of large ticket items, such as automobiles and home improvements, which boosted sales tax by 11% in the City. Better than expected sales tax, property tax and other revenue were the primary drivers in producing a positive budget balance.
Expenses grew at a slower pace than revenue in the prior year, which resulted in a surplus of $3.2 million.
City Council Reserve Guideline
The City Council has identified an amount equivalent to 20 percent of the General Fund expenditure budget for an economic contingency reserve. This reserve is intended to provide a cushion against fluctuations in revenue and expenses.
One Time Resources Policy
The City's policy is to avoid the use of one-time revenues to fund ongoing operations, though when considered as part of the City's Seven-Year All Fund Financial Long Term Plan, use of one-time revenue may be appropriate to bridge short-term gaps in available resources.
Counc...
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