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Existinq Process (CIP Carry-forward) Every two years the City develops and adopts a two-year Operating Budget, as well as a Capital Budget and a four-year CIP. The Operating Budget is balanced and fully funded for the budget cycle based upon revenue projections for the upcoming two years. The Capital Budget is also funded through the first two years, but the City also develops a four-year CIP, which includes the City's capital project plan for two additional years. Capital projects included in the third and fourth year of the CIP are considered again in the next two-year cycle and typically become the first and second year of the new four-year CIP. However, since priorities can change, not every project that is in the third and fourth year of the current four-year CIP is funded and shifted to the first two years of the new CIP in the subsequent two-year budget cycle. Some of the projects are deferred and remained in the third and fourth year, and some are not prioritized and removed from the new CIP. Each two- year budget cycle, City Council has the opportunity to review and reaffirm the priority of each of the third- and fourth-year projects in the current CIP before they are funded and moved forward to the first or second year in the new CIP. Reaffirming the priority of"not completed" first- or second-year projects has traditionally not been part of the CIP development process; the past practice has been that after a project has been fully funded in the first or second year of the four-year CIP, it will remain a fully funded project. The expectation is that when the four-year CIP is approved, the projects funded in the first and second year of the CIP will be accomplished during the two-year period. However, this is not always the case: sometimes projects are started but not completed during the first two years, and sometimes projects are not started during the first two years. Regardless of the project status, these projects remain active and the funding is "carried forward" through funding cycles without a reconsideration of the priority level as the assumption is that since a project was prioritized and funded in the first two years of the four- year CIP, the project remains a City Council priority and will eventually be accomplished. The projects carried forward are reported in the budget year close-out process, but not considered as part of the two-year cycle budgeting process. There are many good reasons for a project to be administratively carried forward through the budget cycles. For example, if a project is underway but not complete, the carry forward is necessary to fund the completion of the project. Even so, staff recommends a change to the carry forward process, so it becomes part of the four-year CIP development on the two-year budget cycle. With the proposed change in the process, if there is a reason to carry a project forward, staff will provide the status and recommend the project be carried forward. But if work on a project has been delayed or not started for whatever reason, staff will inform the City Council which will then be provided an opportunity to reaffirm the project as a priority and it will then be carried forward, or the City Council can determine the project is no longer a priority and choose to reallocate the funding toward current/other priorities. Existing Proiect Review and (Re)Prioritization Staff believes the proposed change to the carry-forward process will benefit future capital budget and the CIP development process regardless of the economic situation, and not 3