Q&A
Council member inquires about addressing projected budget gaps
1:56:06
·
150 sec
Council Member Nantasha Williams asks about strategies to address projected budget gaps in future years. IBO officials explain the use of rainy day funds and prepayments to balance the budget.
- IBO explains the city's requirement to have a balanced budget for the current and next year
- The concept of prepayment is discussed, where surplus funds from the current year are used to cover expenses in the following year
- The practice of rolling over surplus funds is only done for the immediate next fiscal year
Nantasha Williams
1:56:06
Thank you.
1:56:07
I just had hi.
1:56:10
Because you project gaps in the out years, and I know you've been asked this question a few times, but what do you think we can do now to adjust for the projected gaps?
1:56:22
So I think a lot of times in the council and the mayor's administration, like, we're, like, oh, we have surplus, we have money, so we should fund everything.
1:56:32
And there should be no pegs, but just wondering, as a non budget expert, shouldn't we also look at what's happening now if we're already projecting gaps in the out years to adjust for whatever gaps might exist the next couple of years?
Louisa Chafee
1:56:48
Thank you for that question.
1:56:49
So the answer lies in rainy day funds and prepayment, and I'm gonna ask Sarah to give further details.
Sarah Parker
1:56:57
So one of the things the city is required to do is have a balanced budget in the current year and next year.
1:57:05
So in this executive budget, the administration has to present a budget that is zeroed out for 2024 and a budget that is zeroed out for 2025.
1:57:14
How do they get there?
1:57:15
Well, they're anticipating a surplus, and they have that at $3,900,000,000 this year.
1:57:20
In order to get to that 0 bottom line, they say, we're gonna take this money and prepay expenses for next year.
1:57:28
Mhmm.
1:57:29
And so that 3,900,000,000 of extra money this year, we we spend in advance of things that we know we will incur next year, and that gets us to 0.
1:57:40
That also lowers the amount of money we need next year for the budget by the same amount.
1:57:46
They only show this sort of prepayment exercise from this year to next year.
1:57:52
So when we have this conversation next year, if there's a surplus, there will newly be money being rolled into 2025.
1:57:59
We don't know how large that surplus is right now.
1:58:02
IBO projected it to be about 1,100,000,000 As the year progresses, we have we have more information.
1:58:10
It might go up or down, but one of the things to keep in mind is this this concept of the prepayment where we have any surplus gets rolled into the following year, but we we only do that as a as a budgeting practice in the city for 2024 and 2025.
1:58:27
That prepayment, if we have a surplus next year, will help reduce a deficit if there is one, and we have to get to to a balanced budget for 2026.
