FY 2025 BUDGET BOOK - Flipbook - Page 97
to maintain a balanced budget with limited reliance on fund balance reserves, in accordance with
existing City policy.
Financial Forecasting
Financial forecasting plays a pivotal role in budgeting for the City and has significant implications
for both short- term and long-term financial planning.
Revenue and Expenditures Forecasting Impact:
➢ Revenue Forecasts: Accurate revenue forecasting provides the foundation for development of
the City’s budget. The City relies on this forecasting to estimate the funds available for
spending. Overestimating revenue can lead to budget deficits, while underestimating can
result in unspent funds.
➢ Expenditure Forecasts: Projections of future expenditures help allocate resources effectively.
The City must estimate the costs of maintaining essential services, personnel salaries, debt
service payments and other expenses. Overestimating expenditures can lead to budget
surpluses, but it may also result in underfunding important services.
Short-Term Budget Impact:
➢ Balancing Act: Revenue and expenditure forecasts guide City officials in crafting a balanced
budget. By comparing anticipated income to projected expenses, the City can identify any
budget gaps or surpluses that need addressing.
➢ Program and Service Funding: Forecasts influence funding decisions for various programs and
services. If revenues are expected to increase, the City may allocate more resources to
improve infrastructure, expand services, or address community needs. Conversely, revenue
shortfalls may necessitate re-prioritization or expenditure cuts.
➢ Emergency Preparedness: Accurate forecasts help the City set aside funding for emergencies
and other unexpected events. This funding can be crucial for addressing unforeseen
challenges without destabilizing the budget.
Long-Term Planning Impact:
➢
Debt Management: Revenue forecasts help form debt management strategies. The City must
ensure it can meet debt service obligations over the long term without straining resources or
affecting essential services.
➢
Infrastructure Investment: Long-term planning often includes capital improvement projects,
such as road maintenance, utility system upgrades and public facility construction. Revenue
projections help determine the feasibility of these projects and whether they can be financed
without overextending the City’s financial resources.
➢
Economic Development: Forecasts influence decisions related to economic development
initiatives. The City may set aside resources for incentives, infrastructure improvements, or
workforce development programs to attract businesses and foster economic growth.
Implications for Future Budgets and Operations:
➢
Historical Data Analysis: Over time, comparing actual revenue and expenditure data to initial
forecasts provides valuable insight. The City can refine its forecasting methods and adjust
budget priorities as needed based on past performance.
➢
Flexibility: Accurate forecasts enable the City to adapt to changing circumstances. Whether
responding to economic downturns, natural disasters or shifts in community needs, the City
can use forecasts to make informed adjustments to future budgets and operations.
➢
Public Trust: Transparent and well-informed budgeting processes, supported by reliable
forecasts, build public trust. Residents expect fiscal responsibility and accountability in City
governance.
The following areas were considered when developing the five-year financial forecast:
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