Fiscal Year 2013-2015 Special Budget Meeting

BUDGET GUIDE Budget Overview At its core, a local government budget is officially approved revenue and spending plan that authorizes a municipality to use public dollars to provide services. Local governments use their budgets for a variety of additional purposes, including communication, planning, accountability, and evaluation. The City of Oakland has a two fiscal-year (biennial) budget cycle. For the City of Oakland, the fiscal year begins on July 1 and ends on June 30. The current budget is being proposed for fiscal years (FY) 2013- 14 and 20014-15. This same fiscal year calendar is used by the State of California, and most cities, counties, and school districts. The City policy of adopting a two-year budget is intended to improve the City’s long-term planning, enhance funding stability, and to create greater efficiency in the budget development process. While the City’s budget is adopted for a 24-month period, appropriations are divided into two one-year spending plans. During the second year of the two-year cycle, the Mayor and Council conduct a midcycle budget review to address variances in estimated revenues, estimated expenditures, and other changes to the City’s financial condition. The City of Oakland’s budget presents two principal types of data: projected revenues and planned expenditures. Expenditures can be divided by type (e.g. salaries, retirement contributions, debt service, supplies, capital projects, etc.), and by the department that spends them (e.g. Police, Fire, Library, Public Works, etc.). Revenues are monetary resources that the City anticipates will become available during the fiscal year. City revenues can be categorized by type (e.g. property tax, sales tax, permit fees, etc.). City revenues may also be divided into those that can be expended on general or restricted purposes. For instance, the City’ Measure Q parcel tax revenues can only be used for libraries, whereas the City’s business tax revenues can be used for all governmental purposes. To ensure that restricted revenues are used only for appropriate expenditures, the City accounts for its financial resources in different “funds.” For instance grants from the federal Department of Transportation for road construction are held in a different fund than are revenues from the City’s Wildfire Prevention Assessment District. The largest City fund is the General Purpose Fund which can be used for all public purposes over which the City has jurisdiction. General Purpose Fund revenues are generally unrestricted and include most taxes. The budget document will present data related to the General Purpose Fund only and to “all funds” (including the General Purpose Fund). The Budget Process The budget process is the procedure through which the City formally develops, deliberates and adopts its budget. Through the budget the City Council approves revenue estimates and authorizes expenditures. A budget is a reflection of a city’s priorities and policies. The budget process consists of several important stages: 1) Budget Development, 2) Budget Adoption, and 3) Budget Amendment . Budget Development Oct 2012: Five Year Forecast Report Planning for the FY 2013-15 Budget began with the production and publication of the City’s Five-Year Financial Forecast in fall 2012, a planning level estimate of revenues and expenditures that surfaces all major budget issues and contextualizes the long-term financial environment. Nov-Dec 2012: Baseline Budget Development In fall 2012, the Controller’s Office created a “baseline budget,” which is a draft two-year budget that estimates revenues and expenditures if the City maintains its current staffing, programs, and policies. The baseline budget is the foundation upon which the proposed budget is developed. The Controller’s Office worked in conjunction with departments to create the baseline budget, taking into account the latest economic projections and information on likely expenditures increases, B - 1