05-29-2012 Council Minutes - Laserfiche WebLink

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P_.� MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, May 29, 2012 7:00 o'clock p.m. CITY ADMINISTRATOR'S REPORT 10. FUND BALANCE DISCUSSION Olson reported as of December 31, 2011, the unassigned fund balance was $3,523,859, which represents a balance of 60.9 percent of the General Fund operating budget. A fund balance of 50 percent would be $2,892,815, which is $631,044 less than the current balance. The fund balance increased by approximately $250,000 during fiscal year ending December 31, 2011. Olson noted one of the major contributing factors was building permits exceeding expectations for 2011, which were the highest since 2005. The other major portion of that increase was money that was not expended for the services of a consultant planner and less police overtime. According to City policy, the amount in excess of 50 percent is to be transferred into another fund. The total amount to be transferred is $631,044. Any inter -fund transfer requires approval of the City Council. The Council does have the authority to transfer excess fund balance to funds other than the Community Investment Fund. The Community Investment Construction Fund allows the greatest latitude in the use of the funds. The funds can be used to fund city -wide projects that have no other funding source such as a road project, a sidewalk/trail, park acquisition, or allocated to City facilities. This fund is currently funding an annual • transfer in the amount of $130,000 for debt support of the 2010 fire hall refunding bonds. The fund balance as of December 31, 2012, is $1,793,299. Olson stated he would recommend the money be transferred to the Community Investment Construction Fund since it allows the City greater flexibility in how the money will be spent. Other possible funds for receiving a transfer include the Pavement Management Fund, Debt Service Funds, Improvement & Equipment Outlay Construction Fund, or the Permanent Improvement Revolving Fund. Franchot stated he has had some difficulty with cutting what he considers minor but important things out of the City's budget. Franchot asked if there is a way that some of this money could be reserved and allocated to those items that the City elected not to increase last year, such as an increased payment on the employees' health insurance or some of the other items that have been decreased or kept at -the same level. Olson stated the City Council could direct that, but that he would not be comfortable with allocating the funds towards an ongoing expense. Franchot asked where the money is located right now. Olson indicated it is in the General Fund. Franchot stated he does not see an accounting problem since it is already in the General Fund. Olson stated it is not an accounting problem per se but that the levy did not increase due to the fact the City used fund balances to offset those expenses. • Franchot noted the City has chosen not to do some things because they did not think they would have the money and there was a reluctance to increase taxes, but due to good management, the City now has a surplus. Franchot asked if that money could somehow be available to address some of these items. Page 7 of 10