Operating Budget

The 2011 Operating Budget was submitted in accordance with Article VI, Section 6.02, Paragraph (A)(6) of the Fairfield City Charter. The budget represents this coming year's plan for generating revenues and funding expenditures to implement specific programs, functions and activities during the 2011 fiscal year. The budget is the City's primary fiscal planning document. It's major goal is to provide sound fiscal administration. Prudent financial management seeks to meet the needs of the City's residents and businesses while recognizing the constraints of available revenues. Thoughtful expenditure priorities and maintenance of reasonable staffing levels are key to sound budgeting. The Operating Budget was drafted with this in mind. The following highlights are provided:

Revenues – Revenues for the proposed budget, including sale of debt and interfund transfers, are projected at $64,678,555. Estimated revenue from 2011 as compared to 2010 is estimated to be reduced by approximately 1% (all sources), largely as a result of the national recession. The estimated revenue allocation is shown in the chart below.

The largest source of revenue, the 1.5% Income Tax, is projected to generate $22,663,500 for 2011. Revenues are being projected to decrease by 2.0% from 2010 actual collections from this revenue source. Based on that projection, income tax revenues would be allocated as follows:

General Fund (1.1%)		$16,619,900
Street Improvement Fund (.2%)		$3,021,800
Capital Improvement Fund (.2%)		$3,021,800
Total		$22,663,500

Expenditures – Overall 2011 expenditures from all revenue sources total $63,990,387. An increase of 1% from 2010 levels is primarily due to the addition of the administrative fee charge backs to the enterprise funds. Historically the City has spent an average of 95% of its budgeted operating funds, which, in the past, has allowed for the unspent funds to be added back to the respective fund balances. With tighter up-front expenditures being budgeted this year, it is unlikely that substantial balances will be added back to the respective fund balances at the end of 2011.

Wages and related expenses such as taxes and pension comprise 53%, or approximately $34,000,000, of the City's total operating budget. The proposed budget includes no additional personnel or wage increase as the labor contracts expire during the first quarter of 2011. Contract negotiations are anticipated to begin in December.

Five of the City's major funds are depicted below. The graph compares the 2010 and 2011 budgets without including transfers. The General Fund increased .71% to $23,692,676. Static costs increases offset any decreases in departmental budgets. The Street Fund decreased 4.6% to $3,910,238. The Fire/EMS fund has decreased 2% to $5,619,987. The Water/Sewer/Solid Waste funds have increased 2.89% to $8,641,499. The fund charge backs initiated for 2011 offset any decreases in departmental operating budgets. Finally, the Recreation Facilities funds decreased 2.89% to $1,705,182.

Expenditures:

Grants to outside agencies from the general fund have been decreased in 2011 to $40,000, as a result of falling revenues to the City. Grant requests were submitted from Partners in Prime, Fairfield Community Foundation, Fairfield Summer Community Theater, Big Brothers Big Sisters and Civitan International Foundation. The specific allocation of available grant funds will be discussed during the Budget Hearing on November 22, 2010.

General Fund transfers to other funds, including the Solid Waste Fund, Street, Construction and Maintenance Fund, Municipal Garage Fund and General Bond Retirement Fund, total $1,356,000 for 2011. This is a decrease of 20.7% from 2010 due to the reduction of the subsidy to the Solid Waste Fund.

Debt Service – The City's Debt Service Funds are dependent on revenues from the General Fund, Capital Funds, and the Water, Sewer and Recreation Facilities Funds. By allowing the debt service funds to have first rights on City revenues as well as managing the debt effectively, the City's bond rating received a continuance of its investment grade rating of “Aa2” on June, 2010. The City's current net outstanding debt for the 2011 Operating Budget will be $39,528,601, including a proposed $3.5 Million needed for the Exit 39 Winton/Gilmore Road Interchange. The total debt payments will be $1,479,719 for interest and $3,070,169 for principal.

Fund Balance – The projected General Fund ending balance for 2010 is expected to be approximately $7.4 Million. Of this amount, $5,000,000 of the General Fund operating budget is being budgeted as a reserved Fund Balance; in conjunction with Council's goal. This leaves an unreserved cash balance of $2.4 Million. As a result of a projected decline in 2010 revenues, all of those funds will be used to offset expenditures over and above revenues.

The 2011 Operating Budget demonstrates the overall financial strength of the City of Fairfield's financial position, especially in the General Fund. This strength is attributable to the vibrant and diverse economic base that continues to be Fairfield's hallmark along with the City's consistent stewardship of controlling expenditures, even during favorable economic times.

Summary – The Annual Operating Budget is a comprehensive road map used to guide the operations of the City. The City has provided an excellent and comprehensive level of service to its residents and businesses within the confines of its available financial resources. This document is a plan to continue those existing service levels while simultaneously maintaining the City's strong financial position.