Finance Committee Agenda and Packet 2017 10 16

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Louisville [1.! OLORADO SINCE 1878OLORADO - SINCE 1878 FINANCE COMMITTEE COMMUNICATION SUBJECT: DATE: BUDGET AMENDMENT & PROCESS DISCUSSION OCTOBER 16, 2017 PRESENTED BY: KEVIN WATSON, FINANCE DEPARTMENT SUMMARY: Attached (Exhibit 1) is a preliminary 2017 Budget Amendment Worksheet for the next budget amendment that will be presented to Council in November or December. The Finance Committee has previously discussed the need for more budget amendments throughout the year to better align the budget to the latest estimates of revenue and expenditures. To this end, staff has included in the worksheet all changes, both increases and decreases over $10,000, to the 2017 Capital Improvement Plan presented at the August 8 Budget Retreat and September 26 Recommended Budget presentation. For reference, attached (Exhibit 2) is the latest Capital Improvements Plan that will be presented at the October 17 budget hearing. Actually reducing some of the capital budgets to current estimates has caused some concerns for project managers. Project managers are more hesitant to provide estimates that are lower than the budget for fear of having their budgets actually reduced in a formal budget amendment. In addition, there are legal issues related to awarding project contracts that do not have a full multi-year appropriation in the year the contract is awarded, regardless of the year, or years, in which the project will actually by expended. Staff is currently working with the City Attorney to clarify the requirements of CRS 29-2- 110. Therefore, staff is proposing to revert back to a method of capital financial management used in the past, with some modifications due to the biennial budget process. Under this proposal, staff would not propose to lower any capital budgets from project manager estimates of "coming in under -budget". Instead, staff would manage the latest capital expenditure projections using a current year estimate field, as shown in Exhibit 2 under 2017 Estimate column. These estimated amounts are currently used by staff to project ending fund balances. The advantages of this proposal is that the budget for the capital projects are only reduced for known under -budget conditions or special circumstances. Project managers will be free to estimate under -budget projects without fear of losing their legal appropriations. This will also allow contracts to be awarded at the end of one year for work to be performed in another year. Finally, this is a method used in the past, which project managers are comfortable with. FINANCE COMMITTEE COMMUNICATION 16