Res 2016-057/Approving a Budget Policy Statement for preparation of the 2016-2017 fiscal year budget; and declaring an effective date; and consider approval of Resolution 2016-56R.

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SAN MARCUS ..._ k.. City of San Marcos 2017 Proposed Budget Policy Statement Q I. Fund Balance Goals • General Fund: Minimum of 25% (of recurring operating expenses) • Water/Wastewater Fund: Minimum of 25% (of recurring operating expenses) • Electric Utility Fund: Minimum of the equivalent of 60 days of operating expenses including purchased power II. Capital Improvements Program • In-depth review of Capital Improvements Projects underway. Will evaluate funding needs on existing projects, staff capacity to complete current and future projects. Initial Recommendations will be presented to Council • Issue only up to an appropriate amount of debt in the general fund to maintain the 50/50 debt to operations ratio • Utility CIP capacity calculated through the rate model Ill. Revenue Goals GENERAL FUND • No Property tax rate increase • Property Values increase based on a conservative trend • Maintain utility fund franchise fee transfers to the General Fund at 7% • Sales tax will be projected based on current trends with a maximum 5% increase over prior year • Adjust Development Services fees based on the results of the cost of service study • All other revenues will be increased 1c)/0 unless known increases exist • Fees for services will be adjusted based on the average CPI index for the calendar year 2015 WATER FUND • Rate study to determine possible rate increases and structure changes • Recommendations related to rate structure and future rate increases will be made by Citizens Utility Advisory Board • Preliminary rate study results available in June ELECTRIC FUND • Rate study to determine possible rate increases and structure changes. No rate adjustment anticipated. Budget Policy Page 1 April 21,2015