HomeMy WebLinkAboutRES2024-054 Surplus to Capital Acquisition1
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Sponsored by: Sorensen
CITY OF SEWARD, ALASKA
RESOLUTION 2024-054
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO TRANSFER
$1,183,355 TO THE CAPITAL ACQUISITION FUND REPRESENTING
50% OF THE GENERAL FUND ANNUAL SURPLUS FOR 2023 AND
APPROPRIATING FUNDS
WHEREAS, the City of Seward maintains a budget policy which allows for designation
of 50% of the annual General Fund surplus into the Capital Acquisition Fund for the purpose of
financing major capital repairs and/ or replacement, in years when the General Fund' s reserves
fall within prescribed policy band limits; and
WHEREAS, as of December 31, 2023, the General Fund's fund balance policy band (goal)
is between $4.3 million and $8.6 million, representing between three months' and six months of
General Fund expenditures and transfers -out, and the General Fund' s Unassigned Fund Balance
is $10.9 million equal approximately 7.6 months reserves which results in the General Fund
currently being slightly above the high end of the range of desired levels of the unassigned fund
balance; and
WHEREAS, Since 2017 the city has been maintaining the high end of the policy band,
and the General Fund revenues were $1.2 million higher than eApenditures and $1 million higher
than the previous year. In addition, a net positive transfer of $1 million ,results in an increase of
fund balance by $2.2 million. General Fund revenues came in $1 million higher than in 2022,
mainly due to the continued increase in sales tax revenues as well as a'large increase in investment
income; and
WHEREAS, the city's 2023 annual surplus is $2,366,7I1, whch'$1,183,355 represent the
half to be transferred to the Capital Acquisition Fund for the, purpose of :addressing governmental
capital needs major infrastructure needs; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The City Council hereby authorizes the City Manager to transfer $1,183,355
from the General Fund Unassigned reserves to the Capital Acquisition Fund.
Section 2 The amount of $1,183,355 is hereby transferred from the General Fund to the
Capital Acquisition Fund, reducing the General Fund Unassigned Fund Balance to an estimated
$8,603,667, reflecting 6.0 months' reserves, within the established goal of three to six months'
reserves.
Section 3. This resolution shall take effect immediately upon adoption.
CITY OF SEWARD, ALASKA
RESOLUTION 2024-054
Page 2 of 2
PASSED AND APPROVED by the City Council of the City of Seward, Alaska this 23rd
day of September 2024.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
THE CITY OF SEWARD, ALASKA
etAite wPt
Sue McClure, Mayor
Finch, Barnwell, Crites, Calhoon, Osenga, Wells, McClure
None
None
None
Kris Peck
City Clerk
(City Seal)
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City Council Agenda Statement
Meeting Date: September 23,2024
To: City Council
Through: Kat Sorensen, City Manager
From: Sully Jusino, Finance Director
Subject: Resolution 2024-054: Authorizing the City Manager to Transfer $1,183,355
to the Capital Acquistion Fund Representing 50% of the General Fund
Annual Surplus for 2023 and Appropriating Funds
Background and justification:
The City of Seward maintains a budget policy which establishes a goal of maintaining
Undesignated General Fund Reserves equal to between three- and six -months' expenditures and
transfers -out. The purpose of this reserve is to meet unforeseen needs and emergencies, as well
as to pay for unbudgeted items, matching grant funds, hedge against revenue shortfalls, cover
shortages in enterprise fund operations including the hospital and long-term care facilities, etc.
On December 31, 2023, the City's undesignated reserves were $10.9 million, representing 7.6
months of reserves, which is up from 6.0 months at the end of 2022.
The General Fund Reserves are not expected to be the primary source of payment for repair and
maintenance of the City's $75 million (net of depreciation) governmental assets, since these
reserves are expected to meet the operational needs of the general government. While the City
has established Major Repair and Replacement Funds for each of its major enterprise funds
(electric, water, sewer, and harbor), there is no funding mechanism in place to address replacement
of general government assets.
For more than a decade, the City's only source of funding for replacement of governmental assets
has been periodic one-time revenues from the State's revenue sharing program, in addition to
allocating a portion of the General Fund surplus to capital repairs. While one-time revenues have
been used to pay for capital needs such as ADA sidewalk improvements, repairs, and other similar
smaller -scale needs, the City has a significant list of unmet additional capital needs such as
relocating the Public Works Shop and the Public Safety Building -Fire Department. These capital
needs will require a source of funding to address, and the Capital Acquisition Fund is the only
source currently available, with a balance on December 31, 2023, of $ 819,122.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan: Comprehensive Plan (2020): Identifies various public infrastructure needs and
improvements related to public facilities, transportation, recreation, quality of
life, etc.
Strategic Plan:
Other:
Total amount of funds listed in this legislation:
This legislation (V):
Creates revenue in the amount of:
Creates expenditure in amount of:
Creates a savings in the amount of:
Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
Fund Balance Information
Affected Fund (✓):
General
Boat Harbor
Motor Pool
X
Available Fund Balance
X
Yes
SMIC
Parking
Other
Electric
Water
Attorney Signature:
Not applicable Comments:
Wastewater
Healthcare
Note: amounts are unaudited
$ 10,970,377 GF Unassigned Fund Balance at
the end of FY 2023
Finance Director Signature:
Administration Recommendation
X
Adopt Resolution
Other: