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General Capital Improvement Fund (Page 62-63)
<br />Background
<br />The General Capital Improvement Fund (400) was created to fund capital improvements and acquisition
<br />projects not accounted for in another Capital Project Fund. These improvements have been historically
<br />been building improvements, public works equipment, small fire equipment, and parks improvements.
<br />Typically, the expenditures in this fund have included the purchase of tangible personal property
<br />(equipment) or facilities used in the City operations. Starting with this CIP, small fire equipment has been
<br />moved to the Fire Capital Fund (457).
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<br />Sources of Funds
<br />The fund receives its revenues from many sources.
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<br />The largest current funding source for this fund is Local Government Aid (LGA). Under the current LGA
<br />funding formula, the City was to receive a reduction in LGA for 2022 of $105,800. Due to special
<br />legislation, the funding was frozen at the same amount as 2021. Based on conservative budgeting, a
<br />reduction of $105,800 in LGA has been included for 2023, with a reduction of 5% per year after 2023.
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<br />A city-owned cell tower was sold in 2020. As part of this sale, the city is to receive $72,700 until 2029.
<br />This revenue has been included in the General Capital Improvement Fund.
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<br />In addition, there are periodic transfers from the General Fund into this fund. There is a proposed transfer
<br />of $900,000 into this fund in 2021, in accordance with the City’s Fund Balance Policy. The policy states
<br />that if the fund balance in the General Fund rises above the desired range of 42.5% and 65%, “the excess
<br />funds will be transferred to the General Capital Improvement Fund (Fund 400).”
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<br />Fund Outlook
<br />For the next five years, there are sufficient revenues to fund the majority of the identified improvements.
<br />In year five, the fund balance will become negative by $261,933. Unless additional revenues are
<br />identified, a few expenditures will need to be delayed or reduced in 2025 and 2026. 2021 Estimate 2022 2023 2024 2025 2026 Revenues $1,414,003 $1,147,827 $1,296,347 $371,581 $326,942 $320,480 Expenditures 861,581 1,435,875 2,296,980 568,580 669,505 1,266,455 Net inc./(dec.) in fund balance 552,422 (288,048) (1,000,633) (196,999) (342,563) (945,975) Beginning Fund Balance $1,959,864 $2,512,286 $2,224,238 $1,223,605 $1,026,606 $684,042 Ending Fund Balance $2,512,286 $2,224,238 $1,223,605 $1,026,606 $684,042 $(261,933)
<br />Due to the likely continued reductions of LGA funding, the fund will need additional funding sources in
<br />the future. The fund balance continues to trend downward in years 2027-2031. In years 2027-2031 the
<br />average revenue per year is $303,000 but the average expenditures per year is $658,000. This is a funding
<br />gap of $355,000 per year.
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