Parks and Recreation Fund (1221)

Current projections show that FY17 expenditures for our part-time staff salaries and benefits will exceed budget by approximately $315,000.  The FY17 General Fund subsidy to the Fund has been increased by $192,082 from the original budget amount of $812,918 to $1,005,000 as reported in the FY17 estimate column of the FY18 final budget.  The increased transfer covers a portion of the increased expenditures, while the rest will be covered by an increase in revenues from childcare services provided. 

In order to avoid a budget violation as outlined in NRS 354.626, we must augment this Fund by $315,000 to cover the greater than anticipated part-time salary and benefit expenditures.

Motor Vehicle Maintenance Fund (1702)

The FY17 budget for depreciation expense in this fund is inadequate to cover the depreciation that will recorded on all of the vehicles in the city’s fleet.  The FY17 budget is below FY16 levels while $1.3M of new vehicles were added in FY16 and another $2.5M will be added in FY17.  It appears that FY17 depreciation expense will exceed budget by $400,000 if the budget is not augmented.  While depreciation expense does not represent a cash outlay to the fund, it is an operating expenditure and has the same budget compliance requirements as cash items.

In addition, increasing fuel costs have caused another potential budget overage in FY17 in the Motor Vehicle maintenance Fund.  Fuel price projections for the FY17 budget were developed in February of 2016, when the price of fuel had hit an extreme low.   After the budget was prepared, fuel prices began to rise and we have already exceeded the fuel budget in this fund with a month and a half still to post.  We are estimating that the FY17 Budget for Fuel will be exceeded by approximately $200,000 if the budget is not augmented.

In order to avoid a budget violation as outlined in NRS 354.626, we must augment this Fund by $600,000 to cover the greater than anticipated depreciation expense and fuel costs.

The provisions of NRS 354.598005(1) govern the procedures and requirements for augmenting or amending a budget; given that anticipated resources available exceed those estimated.  Available resources are defined in NAC 354.410, and include revenues in excess of those budgeted in a Special Revenue Fund.  Therefore, due to higher than expected revenues collected, sufficient resources are available for this augmentation in Parks and Recreation Fund.

Per NRS 354.598005(4) and NAC 354.481, an Enterprise or Internal Service Fund may be augmented if “expenses do not cause a deficit in the equity balance of the fund.”  This augmentation will not cause a deficit in the equity balance of the Motor Vehicle Maintenance Fund.

To augment the budget, NRS 354.598005 requires the governing board adopt a resolution providing for the augmentation.  This requirement applies to all fund types.  NAC 354.420 requires a “Revised Revenue Schedule” (included as Attachments A and B with this agenda item) be submitted along with the resolution to the State of Nevada Department of Taxation.  This requirement applies only to Governmental Fund Types.  Enterprise and Internal Service Fund augmentations, per NRS 354.598005(4), do not require the submission to the Nevada Department of Taxation.   Therefore, there is no “Revised Revenue Schedule” included for the Motor Vehicle Maintenance Fund.

Attached is a resolution to augment the City’s Parks and Recreation and Motor Vehicle Maintenance Funds. 

The augmentations will be effective upon delivery of an executed copy of the resolution to the Department of Taxation.  Delivery must be before June 30, 2017.

Council could decide not to adopt the resolution to augment the FY17 budget.  This could cause expenditures in the funds to exceed appropriations, and would therefore be a violation of NRS 354.626.  The violation would be noted in the audited financial statements.

Council could decide to adopt the resolution to augment the FY17 budget and provide appropriations to cover the anticipated overages.

I move to adopt Resolution No. 3313 to augment the FY17 budgets of the Parks and Recreation, and Motor Vehicle Maintenance Funds.