AGENDA #4c

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            Roger L. Stancil, Town Manager

SUBJECT:      Annual Budget Amendment to Reappropriate Funds for Prior Year Encumbrances and Other Obligations

DATE:            September 11, 2006

The attached budget amendment would appropriate funds for encumbrances and previously approved grants and capital improvement projects in various funds from the 2005-06 fiscal year.

BACKGROUND AND DISCUSSION

As in past years, after fiscal year end we ask the Council to amend the current year budget to provide funding for encumbrances from the prior fiscal year.  Encumbrances are obligations incurred by issuance of purchase orders for which payments had not been made as of June 30, 2006, because materials or services had not yet been delivered.  In accord with generally accepted accounting principles, these encumbrances are not included in cost totals for 2005-06.  Funds should now be reappropriated to the 2006-07 budget for encumbrances that will be paid during the current fiscal year.

Funding for these expenditures will be shown in special reserves of fund balance that will be created for this purpose in each fund.  The amounts will be shown in the 2005-06 Audit Report on the balance sheets for each fund under the heading "Fund Balance-Reserved for Encumbrances." 

For previously authorized grants included in annual budgets, the attached amendment would appropriate $71,515 for unspent grant funds into the Grant Fund as follows:

In addition to the reappropriations for encumbrances in various funds and grants, the attached amendment would also reappropriate a net total of $689,735 allocated last year for various projects in the Capital Improvements Fund that were not completed, but not encumbered, in 2005-06 as shown below.  Most of this amount, about $380,000, is allocated for uncompleted sidewalks, cemeteries and traffic signal upgrades previously approved by the Council.  We expect that these projects will be completed in 2006-07.

In addition to the above items, the attached amendment would budget for transfers of funds to complete two projects.  The first project is the provision for the use of $17,580 for Downtown street lighting.  The amount was received in October of 2004 as payment in lieu for street lights and would be appropriated from fund balance in order to pay for the upgrades for street lighting near the Franklin Hotel.  The second project is the restoration of the Sports Arts Building.  A portion of the funding for the restoration is included in the annual Capital Improvements Projects Fund; and a portion is included in the Multi-Year Capital Improvements Fund.  The attached amendments would consolidate budgetary authority in the annual Capital Improvements Fund, by transferring $25,404 remaining in the Multi-Year Capital Improvements Fund to the annual Capital Improvements Fund.

RECOMMENDATION

That the Council enact the attached budget ordinance amendment reappropriating unexpended obligations from the 2005-06 fiscal year and the attached multi-year capital projects ordinance.