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Consider the FY 2020-21 Draft Budget and the Seven -Year CIP June 2, 2020 Page 5 City Budget Process The City has an incremental budgeting process, where the proposed budget for the new fiscal year includes the current year budget plus supplemental budget requests. Other approaches such as performance -based budgeting or zero -based budgeting would necessitate workshops for the City Council to provide guidance regarding desired service levels and method of delivery, with a full understanding of the cost of service. For FY20-21, the Budget Office collected detailed information for contracted services, which will support an expansion of the introductory narrative for each Accounting Unit (functional program) in the budget document. Budget staff also plans to expand the range of summary graphics in the budget document. The FY20-21 budget process began in January 2020, when departments started developing supplemental budget requests. The Budget Office implemented the capital budgeting module of the budgeting software this year to improve the internal process. In April, the City Manager met with each department to walk through the supplemental requests. The draft budget includes the following components: 1. General Fund revenue estimates from the Budget Office. 2. General Fund expenditures based upon the FY19-20 budget plus decisions already made by City Council (e.g. increases built into approved contracts), less one-time items, plus supplemental requests supported by the City Manager. The Budget Summary book (Exhibit 1) includes a reconciliation from the FY19-20 budget to the FY20-21 budget. 3. Internal Service Fund revenues and expenses, balanced using estimated service levels provided to the General Fund and restricted funds. Examples include Fleet and Building Maintenance, General Liability and Workers Compensation, Information Technology, and Public Works Project Management. 4. Special Revenue Fund (restricted monies) estimated revenue and expenditures based on available money and allowable activities. Examples include grant funds, Gas Tax, and the Housing Authority. 5. Capital Improvement Projects Funds (restricted monies) estimated revenue and expenditures based on available money, allowable projects, and recommendations from the Capital Improvement Plan. Examples include grant funds and Measure M2. 6. Enterprise Fund (restricted monies) revenue and expenses based upon expected service activity. Examples include water, sewer, and refuse collection. "Available money" includes revenue already received (fund balance), revenue we expect to receive (recurring taxes and per capita allocations from other governmental agencies), and grant revenue that has been awarded (as documented with an award agreement). We do not include revenue that is uncertain for the coming fiscal year, such as grants not yet awarded or developer fees not yet received. The City Council adopts appropriations (the expenditure budget) by Ordinance one fiscal year at a time. The Budget Office monitors revenues throughout the fiscal year, and may adjust its revenue estimates midyear with a report to City Council. L•