Budget Process – Submitted & Adopted Citywide Business Plan

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The Citywide Business Plan is the City Manager’s playbook to execute the City Council goals through a series of objectives. The Financial Strategic Plan and the corresponding five-year planning model is the financial document, or blueprint, to ensure fiscal sustainability.

The Financial Strategic Plan

Fiscal Sustainability

Much like its namesake in environmental policy, fiscal sustainability is a series of  policies, procedures, and practices that allow the city to achieve its priorities and maintain its service levels in primary outcomes while not overextending or depleting its resources. In essence, fiscal sustainability means maintaining a sound fiscal environment.

Planning

Sustainable organizations first “adopt financial policies that promote long-term stability and link financial considerations to operational decisions” through planning, with linked goals and objectives.  Planning also includes a long -range forecast, such as the five-year forecast model.

Reform

Sustainable organizations “need to reform the budget, moving from an incremental budget to policy- based perspectives such as zero-based budgeting or priority-based budgeting.” Reform efforts include community input such as Citizen Work Sessions. True financial reform efforts also acknowledge and model long-term liabilities, promoting accountability in management.

Fiscal sustainability in Kansas City includes several City Council-adopted financial policies that provide benchmarks to ensure solvency. The adopted policies include:

  • Fund Balance and Reserves
  • Structurally Balanced Budget
  • Revenue
  • Debt
  • Investment

Resiliency

The Government Finance Officers Association (GFOA) defines a financially resilient government as one that “has recovered its financial stability and gone on to implement strategies, control mechanisms, budgeting techniques and early warning systems to make sure it can withstand future financial shocks.”

Finally, “true resiliency balances service levels with available resources; funds reserves, capital and liabilities, and creates a culture that promotes flexibility and responsiveness.”

Financial Objectives

The 2018-2023 Financial Strategic Plan adopts the following financial management strategies to meet Council goals.

Fund Balance and Reserves Objectives

(City of Kansas City, Missouri Code of Ordinances, Chapter 2, Article XIV, Sec. 2-1954)

  1. Achieve within five years a General Fund Unreserved Fund Balance of at least two months operating expenditures.
  2. Incorporate special revenue funds into the Five-Year Financial Plan and set guidelines for each fund or fund type’s balance and/or reserve levels.

Structurally-Balanced Budget Objectives

(City of Kansas City, Missouri Code of Ordinances, Chapter 2, Article XIV, Sec. 2-1955)

  1. Adopt ratios for an optimal mix of infrastructure financing methods that protects the City’s investment, minimizes future replacement and maintenance costs, and ensures continued service.
  2. Develop a policy to guide the financial actions the City shall take in the event of emergencies, natural disasters, downturns in the economy, or other unexpected events.
  3. Adopt a model portfolio of services and adjust the City’s expenditure ratios as needed to maintain portfolio balance.

Revenue Objectives

(City of Kansas City, Missouri Code of Ordinances, Chapter 2, Article XIV, Sec. 2-1970)

  1. Seek legislative relief with regard to the five-year renewal of the earnings tax. (Finance and Governance Objective 1)
  2. Ensure that fee-supported services are self-supporting to the extent practicable.
  3. Develop an annual tax burden study.
  4. Review the City’s revenue structure, identify potential new sources of income, and present findings to the Mayor and City Council for consideration. (Finance and Governance Objective 9)

Debt Objectives

(City of Kansas City, Missouri Code of Ordinances, Chapter 2, Article XIV, Sec. 2-1990)

  1. Update the City’s debt policy and adopt debt issuance target ratios.

Investment Objectives

(City of Kansas City, Missouri Code of Ordinances, Chapter 2, Article XIV, Sec. 2-1950)

  1. Attain a market rate of return throughout budgetary and economic cycles, taking into account the City’s investment risk constraints and liquidity needs.

Strategic Planning Objectives

  1. Develop multi-year business/strategic plans for each department that meet service goals while staying consistent with financial realities.
  2. Link budget allocations to measured service levels.
  3. Develop a long-range plan in conjunction with collective bargaining groups to fully fund benefit programs including pension, healthcare, and other post-employment benefits. (Finance and Governance Objective 10)
  4. Address other post-employment benefits liability through either plan design changes, direct funding, or both.

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