Page 5 - FY 2022-23 Supporting Information

Cumulative General Fund Reserves
The Financial Policies established the General Fund reserves as the combination
of the Reserve Fund ($466 million), the BSF ($184 million), and the Unappropriated
Balance (UB) account for mid-year adjustments ($10 million). The Financial Policies
establish a goal that these reserves will equal 10 percent of General Fund revenue. The
Proposed 2022-23 Budget falls short of this goal with a July 1 balance of $660 million, or
8.8 percent.

Capital and Technology Improvement Policy
The City’s Financial Policies state that the City shall invest an annual minimum
target of 1.50 percent of General Fund revenue for capital and technology improvements
and projects. The City falls short of this target by $10 million by investing $102 million, or
1.36 percent. Nonetheless, thanks in part to our active debt program, special funds, and
prior year available balances, the City continues to invest in critical physical and
technology assets to improve and protect our water quality, sidewalks, streets, urban
forest, City facilities, Citywide systems, and data network. Further, this calculation does
not include General Fund subsidies of special funds or debt service that support capital
projects, which means that this metric understates the actual General Fund commitment
to our infrastructure.

One-time Revenue
It is the City’s policy to use one-time revenues for one-time, rather than ongoing
expenditures. The Proposed Budget meets this policy by recognizing $247 million in one-
time revenues while appropriating $387 million for one-time expenditures. Thus, all one-
time revenues are used for one-time expenditures.

Debt Policy
The City’s Debt Policy requires that the total non-voter and voter approved debt
service levels remain below 6 percent and 15 percent of general revenues, respectively.
The Proposed Budget complies with this policy with a non-voter approved debt service
level of 2.96 percent and a voter approved debt service level of 4.74 percent.

Structural Balance
The City’s Financial Policies include a goal of achieving and maintaining a
structurally balanced budget in which future costs are fully paid by future revenues. In
order to assess structural balance, my Office prepares the Four-Year Budget Outlook
(Outlook) that compares projected revenues to projected expenditures through 2026-27.

I am pleased to report that after two years of projected budget gaps during the
pandemic, the Outlook now projects budget surpluses of $77 million in 2023-24, $254
million in 2024-25, $470 million in 2025-26, and $600 million in 2026-27. Therefore,
Outlook demonstrates structural balance throughout the period.

This shift to surpluses is driven by our projection of strong revenue growth in
2022-23 followed by continued growth at historic averages. This is coupled on the
spending side with slower increases during the projection period thanks to a high level of
one-time spending dropping out of the Outlook, the lack of agreed to employee