FY 2026-27 Proposed Midcycle Budget

Budget Balancing The term ‘balanced’ refers to when all projected revenues are equal to all projected expenditures in a budget or forecast. If projected revenues exceed projected expenditures, then the budget or forecast is said to have a projected surplus. If projected expenditures exceed projected revenues, then there is a projected shortfall. By policy, the City Council must adopt a balanced budget.   A structural imbalance occurs when there is a difference between ongoing revenues and expenditures where they do not match and balance. . A budget that uses one-time revenues to pay for ongoing expenditures may be balanced over the fiscal period but suffers from a structural imbalance: in this case a structural shortfall. By contrast if ongoing revenues exceed ongoing expenditures, a budget may have a structural surplus. Assets & Liabilities Assets are tangible and intangible items that hold value and include City cash, investments, buildings, land, and equipment. Assets can be divided into two types: current and long-term/fixed assets. Current assets include cash, receivables, and short-term investments. Long-term and fixed assets include things such as long-term investments, property, plant, and equipment that have value, but cannot be quickly converted into cash.   Liabilities are monetary amounts that the City is obligated to pay based upon prior events, transactions, or other financial commitments. . For example, if the City owes money resulting from borrowing or issuing debt (e.g., bonds), those would be considered liabilities. Liabilities can also be divided into two types: current liabilities and long-term liabilities. Current liabilities are those that the City expects to pay within a one-year period. This includes wages paid to active employees for hours worked, or bills for utilities. Long-term liabilities are obligations that the City will pay out over time, such as pensions, retiree medical obligations, and long-term debt service.   Unfunded Actuarial Accrued Liability (UAAL), or Unfunded Liability, is often mentioned in conjunction with government finances. UAAL is defined by the State Actuarial Standards Board as “the excess of the actuarial accrued liability over the actuarial value of assets”. Simply put, it is the amount that an entity is projected to owe that is not covered by projected future payments under a specific payment methodology, or by assets currently held by the entity. Unfunded Liabilities typically refer to the City’s future pension and retiree healthcare costs for which the City does not have sufficient funds to cover. Financial Reports & Actuals “Actuals” are recorded revenues and expenditures that have occurred over a defined period. While budgetary values are projected prior to the close of a fiscal period, actuals are recorded after the fact. A financial report is a statement of actuals and accruals. Actuals can be divided into two categories: unaudited and audited. Unaudited actuals include those items reported in the City’s Quarterly Revenue & Expenditure Reports. This financial data is distinguished from audited actuals in that they have not been evaluated by an independent financial auditor. The City has an independent financial audit conducted following the close of each fiscal year to provide an independent opinion as to whether the City’s financial statements are stated in accordance with General Accepted Accounting Principles (GAAP). The audited actuals are presented in the Annual Comprehensive Financial Report. 24