The principal issue to address in developing the budget is the economy and the impact it is having on city resources to fund services to the community. In prior fiscal years, we had revenue growth to pay for rising demand for city services and cost increases related to service delivery. Revenue resources have shrunk while demand for city services remains steady or increases in some areas, requiring the city look at adjustment options to its operating budget.
Enterprise funds are self-sustaining and supported by the revenue generated by services provided. For example, the sanitation enterprise fund is supported by the fees collected for trash services. The city’s enterprise funds maintain a sufficient fund balance to absorb fluctuations in annual revenue, ensure annual debt service coverage and/or to make sure long-term regulatory requirements can be met. For example, the water/sewer enterprise fund supports the provision of water and sewer service to Glendale residents and businesses. It is completely self-supported through water sales, sewer user fees and other related user fees. The fund receives no tax revenue and pays an annual contribution to the general fund for administrative support services such as personnel, finance and legal services that general fund departments provide. If the general fund departments did not provide these services, the enterprise fund would have to contract with outside vendors to receive the services.
Capital Improvement Plan Budget
The city annually updates the Ten-Year Capital Improvement Plan (CIP), which includes more than $1.7 billion in projects. The first year of the plan is typically the only year funded by council. The remaining nine years are for planning purposes and funding is not guaranteed to occur in the year planned. The final decision to fund a project is made by City Council. Projects include renovations to city buildings, street improvements, rehabilitation and renovation of existing parks and recreation facilities, and upgrades to water treatment and wastewater collection facilities.
The CIP management team, which includes staff from engineering, management and budget, field operations and finance, reviews all CIP projects for their construction costs and projected impact on the operating budget. Projects with high operating costs can be deferred to ensure the city can absorb the operating impact once the facility opens. This occurred with the West Branch Library project. It was scheduled for construction in FY 2010 but was deferred to FY 2014.
Fund Description and Fund Balances
The city of Glendale uses fund accounting to track revenues and expenditures. Some funds, such as the streets fund, are required by state legislation. Others were adopted by the city to track and document revenues and expenditures related to specific operations. Enterprise funds are expected to be self-supporting through revenue for the services provided. For these funds, the city charges a fee for a specific service, such as sanitation collection, just like any other business would do. Ending fund balances in each of these funds are composed of the ending balance plus the contingency reserve, which should remain unspent barring any unforeseen emergencies.