Tuesday, August 12, 2014

Richardson's Budget - Black or Red?

It's August and that means it's time for Richardson budget roulette. Will the proposed city budget be balanced? You'd think that would be a simple question. Isn't the city required by law to have a balanced budget? Well, yes, but it all depends on the meaning of "balanced".

Last year when I looked at this question, I concluded that the city's 2013-2014 budget was indeed balanced and didn't require use of that sneaky asterisk ("plus reserved fund balance and other financing sources").

After the jump, reviewing that conclusion and looking ahead at 2014-2015.

First, let's look back to last summer at the proposed 2013-2014 budget:

Budget FY 2013-14
Beginning Fund Balances$38,017,599
Ending Fund Balances$38,970,689

That's the proposed budget that I concluded was balanced by any measure.

Now let's look at the city's current estimated actuals for 2013-2014 (the fiscal year isn't over yet, so these numbers can only be estimates at this time).

FY 2013-14 Estimated
Beginning Fund Balances$46,049,285
Ending Fund Balances$42,433,114

Don't ask me to explain the discrepancies. I have as many questions as answers. That proposed surplus turned into a deficit. The budget revenues are coming in almost exactly on target, but the expenditures are $4 million over budget. Who didn't control the purse strings? It looks like the city relied on drawing down its fund balances to the tune of $4 million to "balance" the budget. Also hard to explain: why were the beginning fund balances $8 million higher than was budgeted? How did the city not see that coming? Each year's proposed budget is prepared just a couple months before the end of the fiscal year. Like I said, I don't know the answers. The City Manager didn't try to answer any of these questions when he presented these numbers to the City Council. And no one on the City Council asked any questions when these numbers were presented.

Because I can't even explain the 2013-2014 estimated actuals, I'm not sure how confident I can be in explaining the 2014-2015 proposed budget, but here goes anyway.

Budget FY 2014-15
Beginning Fund Balances$42,433,114
Ending Fund Balances$43,772,530

Once again, the budget is balanced, without needing to draw down the fund balances. Ta-da! Woohoo! WE DID IT! I wish I could say "again" but I'm not sure my joy at last year's balanced budget turned out to be justified. Those fund balances were drawn down after all. So, I'm not sure the city can deliver on this year's balanced budget either.

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