For Immediate Release
Council OKs FY13 budget with $4.3 million in reductions
No impact on basic services; first step in 2-year plan to replenish reserves
Surprise AZ (June 12, 2012) After a last minute decision to reduce its discretionary budget by $25,000 and weeks of public discussion which included line by line departmental budget reviews, the Surprise City Council unanimously approved a $184.2 million budget for fiscal year 13 (FY13) Tuesday night. The budget reflects $4.3 million in reduced expenses, an additional $15.8 million for interfund transfers and loans, and $22.2 million in budget contingencies that cannot be spent without specific Council action during the course of the fiscal year. It also includes $1 million set aside to take advantage of economic development opportunities. FY13 begins July 1, 2012.
“This is a significant achievement in the two-year plan to put Surprise on sound financial footing,” said City Manager Chris Hillman. “It was a team effort and a win for our community.”
The reductions do not directly impact delivery of critical city services, such as police, fire, sanitation, water services or recreation programs, Hillman said. It does not increase city fees or the amount the City collects in property taxes, he added.
The budget process was complicated by the draft results of the FY11 budget audit, which became known in March. Imbalances among internal funds required the City to transfer millions from its general fund, draining the City’s reserves to near zero.
“Council policy and prudent financial management requires a reserve equal to two month’s operating expenses, and Council was very clear they wanted the fund replenished in two years at the most,” Hillman said. Budget reductions and anticipated increases in city revenues will restore the reserve to the $13 million, two month requirement by June 30, 2014, he said. “At that time, barring another negative turn in the economy, Surprise will be in excellent financial condition with the capacity to make significant capital improvements,” Hillman said.
The auditing firm CliftonLarsonAllen notified the City in March of its forthcoming “qualified opinion,” based on concerns with record keeping mainly involving past development agreements and impact fee management. That news was cited by the bond rating firms Fitch and Standard&Poor’s, which lowered the City’s debt ratings in March.
The Council approved additional audits of these areas in April, with results expected in approximately 6 months. The results could require midyear reductions to the newly-adopted FY13 budget, according to the city’s Finance Department. “We will wait and see,” Hillman said. “As we go forward, we will continually seek additional savings in the budget.”
The City Manager's Recommended Budget was released on May 8, identifying $4.3 million in cost reductions. Reduced personnel costs, including 33 positions eliminated in May, account for approximately $2.9 million of the savings. City departments identified another $1.4 million in cuts.
The final Comprehensive Annual Financial Report for FY11, including the final CliftonLarsonAllen audit report, was also accepted by the Council Tuesday night.
The FY13 Budget presented at the meeting is available for public review on the City’s website www.surpriseaz.gov.