Page 4 - 2020-21 Supporting Information Book_Revised

Budget Stabilization Fund
Pursuant to the Budget Stabilization Fund (BSF) policy, the Proposed Budget could
include a $38 million transfer from the BSF to the Proposed Budget. As this transfer is
discretionary, the Proposed Budget complies with the policy. In light of the significant
uncertainty surrounding the City’s finances, it is extremely prudent to retain this balance
in the BSF rather than transferring it to the Proposed Budget.

The BSF will begin the year with a fund balance of $114 million. The Reserve Fund,
the UB/Reserve for Mid-Year Adjustments, and the BSF, cumulatively, bring the City’s
total General Fund reserves in 2019-20 to $387 million or 5.80 percent of the General
Fund. This falls short of the goal set in the City’s Financial Polices of maintaining reserves
at 10 percent of General Fund Reserves.

Capital and Infrastructure Funding
The City’s Financial Policies state that the City shall make adequate investments to
maintain real property and equipment at appropriate levels. This policy amended the
longstanding policy requiring the City to use 1 percent of General Fund revenues for capital
or infrastructure improvements. My Office has submitted a proposal to revise the City’s
Capital and Infrastructure Policy to, among other things, increase the target spending level
to 1.5 percent and include technology project spending. At this time, however, no spending
target is currently in place. Nonetheless, it is appropriate in the interim to use the 1 percent
level as our standard.

Pursuant to the 1 percent standard, the Proposed Budget should include $67 million
for infrastructure expenditures. The Proposed Budget falls short of this total, appropriating
$36 million, $31 million short of the required spending. The total represents 0.53 percent
of General Fund revenue. Nonetheless, thanks in part to several special funds, the City
continues to invest in critical physical assets to improve and protect our water quality,
sidewalks, streets, urban forest, and City facilities.

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 $60 million in one-
time revenues while appropriating $70 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 3.58 percent and a voter approved debt service level of 5.39 percent.