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11 THE CITY OF : ;: _;_r CITY COUNCIL AGENDA REPORT PLEASANTON, February 21, 2023 Finance TITLE: ACCEPT THE FY 2022/23 MIDYEAR BUDGET REPORT AND ADOPT A RESOLUTION APPROVING FY 2022/23 BUDGET AMENDMENTS SUMMARY The City follows a three-step operating budget process that starts with the approval of a two-year Budget (Budget); then after the first year of the Budget, the adoption of a Midterm Budget; and the adoption of Midyear Budget adjustments during each of the two years of the Budget. This report is the Midyear Budget report for the second year of the Budget that recommends adjustments to the FY 2022/23 Budget adopted by the Council on June 21, 2022. While these recommended changes primarily affect the General Fund, Water Fund, Sewer Fund, Golf Fund, Cemetery Fund and Internal Services funds, some adjustments are also recommended to the Special Revenue Funds and Capital Projects Funds. Included in the recommended Midyear Budget adjustments are recognition of grant funds, Council actions, and other Budget adjustments that have occurred since the adoption of the Midterm Budget. A complete summary of the adjustments for all funds is included in Attachment 2. In summary, the General Fund is anticipated to have a $2.5 million surplus due to a combination of revenue increase, loan repayment from the Golf Operating Fund, and expenditure savings. Staff recommends keeping the projected surplus in the General Fund until further analysis at year end. This would provide Council the flexibility to draw on the surplus funds if unanticipated costs incurred in the second half of the fiscal year. RECOMMENDATION Adopt the attached resolution approving Midyear adjustments to the FY 2022/23 Budget. FINANCIAL STATEMENT The recommended adjustments to various funds and the financial impact to each fund are outlined in Attachment 2. The discussion section of this report also summarizes the recommended adjustments and their respective impacts to the budget and fund balances. BACKGROUND Staff regularly monitors expenditures, cautiously forecasts revenues, and makes recommendations to address changes as quickly as possible to maintain a balanced budget. The Midyear Budget report helps staff address budget variances in a timely manner.