Operating Budget

2020 Operating Budget

The 2020 Operating Budget is submitted for your review in accordance with Article VI, Section 6.02, Paragraph (A)(6) of the Fairfield City Charter. The proposed budget represents this coming year’s plan for generating revenues and funding expenditures sufficient to implement specific programs, functions and activities during the 2020 fiscal year. As you know, the budget is the City’s primary fiscal planning document. Its major goal is to provide sound fiscal administration and 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.

Revenues2020_Revenue

Revenues for the proposed budget, including inter-fund transfers, are projected at $83,680,360. 

The income tax revenue paid to the General fund has, as its primary intended purpose, bolstered the reserves to meet the City’s bond rating agency’s (Moody’s Investor Services) requirements. The estimated revenue allocation is shown in the chart.

Sources of Revenue

The largest source of revenue, the 1.5% Income Tax, is projected to generate $31,250,000 for 2020. Revenues are being projected based on 2019 actual collections from this revenue source. The income tax revenues will be allocated as follows for 2020:

Fund Revenue
General Fund (1.2%) $25,000,000
Street Improvement Fund (.15%)   $3,125,000
Capital Improvement Fund (.15%)   $3,125,000
Total Fund
$31,250,000

Expenditures

Overall 2020 expenditures from all uses total $75,533,974. Historically the City has spent an average of 95% of its budgeted operating funds which, in the past, has allowed for the remaining 5% of unspent funds to be added back to next year’s respective fund balances. With tighter up-front expenditures being budgeted this year, and in years past, it is unlikely that the same percentages of balances will add back to their respective funds at the end of 2020. Three labor contracts expire during 2020. Therefore, this budget does not include any wage increases beyond the required step or license increases agreed to in the prior contracts. Note that relatively fixed costs such as wages, along with related expenses such as taxes and pension contributions, comprise 57%, or approximately $43,114,659, of the City’s total operating budget.

The seven major types of funds are charted and depicted graphically below. This graph compares 2020 estimated revenue with 2020 projected expenditures. Each fund shown below is structurally balanced for 2019.

2020_RevenuevExpense


Outside Grants

Grants to outside agencies from the general fund have been budgeted at the same level in 2020, at $36,000. Grant requests were approved for:

  • Fairfield Community Foundation
  • Fairfield Food Pantry
  • Fairfield Prevention Coalition

Presentations from the grant requestors were heard during the Council-Manager Briefing on October 15, 2019.

Transfers

General fund transfers to other funds, including the Street, Construction and Maintenance, Municipal Garage, and Recreational Facilities funds total $1,300,000 for 2020.

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. Due to the City’s commitment to provide the debt service funds with first rights on City revenues, as well as our intent to manage the debt effectively, the City’s bond rating received yet another confirmation of its investment grade rating of “Aa1” in August, 2017. The City’s current net outstanding debt for the 2020 Operating Budget will be $17,474,380. The total debt payments in 2020 will be $670,473 for interest and $2,103,138 for principal.

Fund Balance

The General fund balance has been the subject of much discussion over the past several years as local government funds and estate taxes have either decreased or been eliminated. The General fund’s main source of revenue, the local income tax, has now stabilized and is being conservatively projected to increase over 2019 projected revenues by 3.8%. The General fund balance is expected to be approximately $17 million at the end of 2019. In conjunction with Council’s goal of a 25% reserve, $7.575 million of the General fund balance is being budgeted as a reserved fund balance. This leaves an unreserved cash balance of $11.425 million to continue to provide services to residents as well as to offset future unforeseen national, regional and/or local economic changes, or in the event of negative occurrences.

The 2020 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 managing expenditures, particularly during challenging economic times.

Summary

The Annual Operating Budget is a comprehensive road map used to guide the operations of the City. Fairfield has provided an excellent and comprehensive level of service to its residents and businesses within the constraints of available financial resources. This document is a plan to continue those existing service levels, while maintaining the City’s strong financial position in a sustainable manner.