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Continued/Carryover Appropriations Policy The City’s Municipal Code states that all unexpended or unencumbered appropriations shall lapse at the end of the scal year, except for appropriations for capital projects that are required for the completion of the approved project for not more than ve scal years. Other encumbered funds from the previous scal year are carried over to the current scal year through a list of continued appropriations. Proposition 4 (Gann) Appropriation Limit Article 13-B of the California Constitution was added by the November 1979 passage of the Gann Initiative. This legislation mandated that California Cities must compute an Appropriation Limit, which places a ceiling on the total amount of tax revenues that the City can appropriate annually. The legislation also provides that the governing body shall annually establish its appropriations limit by resolution. The appropriations limit is calculated by determining appropriations nanced by proceeds of taxes in 1978/79 base year and adjusting the limit each subsequent year for changes in the cost of living and population. This Appropriation Limit is the maximum limit of proceeds from taxes the City may collect or spend each year. Budgeted appropriations are limited to actual revenues if they are lower than the limit. The Appropriations Limit may be amended at any time during the scal year to reect new data. Multi-Year General Fund Financial Plan Long Term Forecast Practice The City’s Multi-Year General Fund Financial Plan Long Term Forecast projects the scal health of the City’s funds and allows management to understand the scal gaps that may exist between revenue projections and projected expenditure requirements. The forecast and underlying assumptions and methodology are clearly stated, available and referenced in the nal budget document. In this way, policymakers can issue directives that range from maintaining the status quo to closing the gap between revenues and expenditures. The City Manager’s Budget Directive is largely based on the information drawn from the plan data, as is the Mid-Year Budget Review. Revenue estimates are prepared through an objective, analytical process based on year to-date trends, prior years’ data, and anticipated one-time adjustments. In all instances, the City provides reasonable revenue projections to prevent undue or unbalanced reliance on certain revenues and to ensure the ability to provide ongoing services. In order to improve future forecasting, staff will analyze the variances between previous forecast and actual amounts. The variance analysis will consider the factors that inuence revenue collections, expenditure levels and forecast assumptions. The forecast also includes a fund balance calculation. Balanced Budget Policy The City’s policy is to adopt a balanced budget, which means that planned expenditures do not exceed planned funds available. Available funds may include the use of fund balances on hand, provided that in the case of General Fund the available fund balance does not drop below the 20 percent level required by City Council Reserve Guidelines detailed below. City Council Reserve Policy The City Council has earmarked an amount equivalent to 20 percent of the General Fund expenditure budget for an Economic Uncertainty Reserve. This reserve is intended to provide a cushion against uctuations in revenue and expenses. One Time Resources Policy The City’s policy is to avoid the use of one time revenues to fund ongoing operations, though when considered as part of the City’s Multi-Year All Fund Financial Long Term Plan, use of one time revenue may be appropriate to bridge short-term gaps in available resources. Debt Management Policy The California Constitution required that long-term debt pledged by the full faith and credit of the City can only be approved by voter referendum. Per State of California statute, the City’s debt limit is set at 15 percent of total adjusted assessed valuation of all the real and personal property within the City. Currently, the City’s total General Obligation Debt is signicantly below its debt limit. The City also carries bonded debt secured by specic revenue sources, and Certicates of Participation secured by interests in City assets. The debt management policy establishes parameters to be considered before debt issuance such as: Purposes for which the debt may be issued shall be determined Legal debt limitations, including limitations on the pledge of the issuer’s general credit shall be calculated and these limits are generally set for legal, public policy and nancial reasons Before issuance of debt the debt structuring practices shall be considered Additional consideration shall be given to credit objectives such as specic credit ratings, benchmarks, debt ratios and other affordability targets City of San Leandro | Proposed Biennial Budget FY24-25 Page 38