Recommendation

Staff recommends that the Mayor and Council amend ordinance #23-07 to appropriate funds and levy taxes for Fiscal Year 2008.

Staff recommends that this ordinance be introduced and adopted at the meeting of February 11, 2008. If the Mayor and Council wish to introduce the ordinance and proceed to adoption at the same meeting, the ordinance should first be introduced, then a motion should be made to waive the layover period. If the motion to waive the layover period is approved by an affirmative vote of four members of the Mayor and Council, the Council may then proceed to move to adopt the ordinance.

Discussion
In accordance with the City Charter, since the budget ordinance is adopted at the fund level, a change in the appropriated amount of any fund requires action by the Mayor and Council. The vehicle for such action is an amendment to the budget ordinance. The attached budget amendment ordinance (Attachment A) would amend the Fiscal Year 2008 budget.

Staff recommends that the following operating funds be amended in order to recognize changes in expenditures and revenues since the budget was adopted on May 21, 2007. Details on the changes are listed below by fund.

General Fund
Revenues
Staff recommends that General Fund revenues be increased by a total of $641,048. This net increase is comprised of $26,048 related to grant funding, $50,000 for licenses, $550,000 in inter-governmental revenues, $70,000 in charges for services, $50,000 in redlight camera, and ($105,000) for other revenues.

Three major changes to the General Fund revenue include an increase in income tax of $700,000, a decrease in highway user revenue of $200,000, and a decrease in interest earnings of $150,000. Staff recommends increasing income tax revenue by $700,000 from the adopted budget of $8,300,000 to align actual revenues collected in FY 2007 with the budgeted amount for FY 2008. There has been reasonable growth in income tax receipts in the past few years due to the City's population growth. Income tax is the City's second largest source of General Fund revenue and the City's most volatile source of revenue. Actual income tax revenue collected for FY 2007 totaled $9.8 million.

Staff recommends that highway user revenue be decreased by $200,000 from the FY 2008 adopted budget of $3,200,000. Highway user revenue is the City's share of gasoline tax and vehicle registrations collected by the State. This decrease is a result of current estimates indicating a lower number of registrations and mileage figures. The Maryland State Highway Administration (SHA) provides the City with estimates every year of the projected revenue from registrations and mileage figures.

Staff also recommends decreasing interest earnings by $150,000 from the adopted budget of $900,000. This decrease is due to the Federal Reserve reducing the Federal Funds Target Rate (the overnight bank lending rate) which impacts the rate that the City's investment portfolio is able to earn. A decrease in interest earnings is also needed in the Parking Fund as mentioned below.

Expenditures
Staff recommends that General Fund expenditures be increased by a total of $641,048. This increase is comprised of $26,048 related to grant funding and $615,000 for an additional transfer to the Parking Fund. This additional $615,000 is needed to help support the Parking Fund since the Town Square garages have not yet charged for parking in FY 2008. The transfer from the General Fund to the Parking Fund was originally adopted at $950,000 for FY 2008. If the $615,000 is added through this amendment, the Parking Fund transfer for FY 2008 will total $1,565,000.

Parking Fund
Revenues
Staff recommends that Parking Fund revenues be decreased by a total of $390,000. This net decrease is comprised of an increase of $25,000 from the Parking District (special property tax), increase of $20,000 from the County contribution to the Parking District, a net decrease of $950,000 for meter revenue and meter violations (representative of not charging for parking for nine months of FY 2008), a decrease of $100,000 in interest earnings, and an increase of $615,000 in the transfer from the General Fund. The Mayor and Council received a detailed report on January 28, 2008 in reference to the hours and rates to be charged for parking, and a recommendation to begin charging for parking in March 2008.

Although the additional $615,000 in the General Fund transfer does not cover the entire shortfall of the Parking Fund revenue, it does provide enough funding to support the current operations of the fund without the need to use 100% of net assets.

Expenditures
Staff recommends that Parking Fund expenditures be adjusted by a total of $390,000. In order to fund the overall decrease in Parking Fund revenues, the Parking Fund must utilize $390,000 of net assets.

Speed Camera Fund
Revenues
Staff recommends that Speed Camera Fund revenues be increased by a total of $2,400,000. This total increase is from speed camera citations and assumes an average of 10,000 citations each month for the remainder of FY 2008. This adjustment will increase the FY 2008 adopted budget of $1,684,200 to $4,084,200.

Expenditures
Staff recommends that Speed Camera Fund expenditures be increased by a total of $2,400,000. This increase consists of $4,000 for overtime for the speed camera technicians, $975,000 payment to the speed camera vendor, and the remaining $1,421,000 will be placed in the Speed Camera Fund to be used in FY 2009.

Water Fund - CIP
Staff recommends that the Mayor and Council approve a transfer of $275,000 from the Air Release Valves project (210-850-8B34) to the Horizon Hill Water project (210-850-5C34). This funding is to assist with the capital expenditures associated with the water main rehabilitation program. In conjunction with this transfer, staff recommends that the Horizon Hill Water project be renamed to the Water Main Rehabilitation project to more accurately reflect the project description and goal. Since this is only a transfer there is no change to the overall Water Fund total. The total transfer equals $275,000.

Mayor and Council History
There have been three budget amendments in FY 2008. The dates of the Mayor and Council meetings when the budget amendments were approved are as follows:

Amendment #1 - July 23, 2007
Amendment #2 - August 6, 2007
Amendment #3 - October 22, 2007

Fiscal Impact
The following funds will be adjusted if this budget amendment is approved:

Operating Budget
	FY 2008 Budget	Feb. 11, 2008 Adjustments	FY 2008 Current Budget
General	65,582,919	641,048	66,223,967
Water	6,329,527	-	6,329,527
Sewer	6,308,818	-	6,308,818
Refuse	5,807,364	-	5,807,364
Parking	3,877,143	(390,000)	3,487,143
Stormwater Management	1,398,883	-	1,398,883
RedGate Golf	1,394,682	-	1,394,682
Special Activities	1,883,325	-	1,883,325
CDBG	684,000	-	684,000
TC Management District	721,098	-	721,098
Speed Camera	1,684,200	2,400,000	4,084,200
Debt Service	6,315,762	-	6,315,762
Total	$101,987,721	$2,651,048	$104,638,769

Attachments
Attachment A: Budget Ordinance Amendment

Attachment B: Summary by Account of Recommended Budget Changes

Attachment C: Amended Page 3-1 of the Operating Budget Book

Department Head:



Gavin Cohen, Director of Finance
Approved on: 01/28/2008

City Manager:

Scott Ullery, City Manager
Approved on: 02/02/2008