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27 and line items within any fund; however, any revisions which alter the total expenditures of any fund must be approved by the City Council. Transfers between funds must be approved by the City Council. At the end of the fiscal year, encumbered appropriations are carried forward and become part of the following year’s budget while appropriations that have not been encumbered lapse, unless otherwise authorized by the City Council and the City Manager. In fiscal year 2012-13, the City decided to move to a biennial budget process. The biennial budget sets forth planned expenditures and revenues for two consecutive fiscal years. Year 1 and 2 expenditure and revenue plans are presented to the City Council in a single document. At the conclusion of the biennial budget review and deliberation process, Year 1 of the biennial budget is approved and appropriated by the City Council, which sets the level of authorized funding for the fiscal year. The Year 2 budget is also approved but is subject to mid-cycle review and appropriation action in the following year. During the mid-cycle review, City staff may propose changes to the budget. At that time, the City Council will consider the proposed changes and recommendations. At the conclusion of the deliberations, the City Council will approve and appropriate funds for Year 2 of the budget. In addition to the annual budget process, the City Council will review expenditures and revenues at the mid-year and makes changes as needed. The City Council adopted its biennial budget for fiscal years 2017-18 and 2018-19 on June 5, 2017. The City Council reviews budget results at the mid–year review and at budget adoption. The ongoing review and long range planning focus for financial management provides numerous opportunities to identify and respond to changes in revenues and expenditures and in community priorities. Quarterly financial reports on budget performance are reviewed by department managers and staff to identify budget problems and recommend corrective action. In addition, the City prepares a long-term financial plan periodically that provides a 10-year framework to ensure the City’s priorities are clear, goals are laid out to respond to priorities and goals are achieved. The City’s long-term capital planning is also incorporated into an annual capital improvement program with the budget process. City Reserves. The City Council has adopted budget guidelines that provide for a reserve of at least 16.67% of the budgeted General Fund operating expenditures for the following fiscal year to provide for (i) economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy; (ii) contingencies for unseen operating or capital needs; and (iii) cash flow requirements. Such reserve is maintained in the form of Major Emergencies Reserve Fund and an Economic Uncertainty Reserve Fund which collectively have a balance in excess of the 16.67% target balance, as described in more detail below: • Economic Uncertainties Reserve. The Economic Uncertainties Reserve is intended to provide a cushion in fluctuations in revenues and expenses of the General Fund. As of the end for fiscal year 2016-17, the balance in the Economic Uncertainties Reserve was approximately $28 million. For fiscal year 2018-19, the City Council has budgeted approximately $12.4 million or 16.67% of the projected General Fund expenditures. The City projects that the balance in the Economic Uncertainties Reserve will be reduced to approximately $4.4 million for fiscal year 2019-20, and deficits in such reserve to occur commencing in fiscal year 2020-21 through fiscal year 2022-23 ranging of approximately $2.1 million in fiscal year 2020- 21 to approximately $15.5 million in fiscal year 2022-23. Such projected deficits in