“We had to spend some of it (the general fund) to get through lean times,” Castleberry said, “but we’re to the point where we can’t do that anymore.”
About 58 percent of the general fund revenue is comprised of sales and use tax. Castleberry said because cities operate on sales tax, the general fund needs to be healthy enough to serve as a savings account.
Capital funds are different, he said, because that money is earmarked for projects and should be spent.
To close the gap, the city council will consider three options: continued prudent financial management, implementing a storm water utility fee and/or paying off the University North Park TIF apportionment obligations.
The city has not completed all of the projects as outlined in the TIF agreement, and the other stakeholders would have to sign off on an early exit.
The city is budgeting for a projected 4.2 percent growth in sales tax for the coming fiscal year.
“The budget document is a lot of things,” Francisco said. “It presents the financial plan of the city, but it also communicates a lot of other things. Everything the city does is discussed in this city budget.”
Francisco and his staff looks at historic financial trends and future trends in making up the budget, which is basically an informed guess on what the coming year will bring.
It’s never an exact science. Building trends are an important indicator of economic health.
“Our local building sector has been pretty good the last year or two,” Francisco said.
There was an increase last year in the number of building permits, but less of an increase in the dollar value of those permits.
Another source of revenue is franchise fees, which make up about 10 percent of the general fund revenues, but those fees can be unpredictable.