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Financial Update PresentationBoulder City Council Study Session May 24, 2022 Financial Update & 2023 Budget Outlook Finance Department Agenda Finance Department| Financial Update & Budget Outlook 1.CU Econometric Forecast Overview Special Guests: Richard Wobbekind (Associate Dean for Business & Government Relations, Senior Economist and Faculty Director of the Business Research Division at the University of Colorado Boulder) Brian Lewandowski (Executive Director of the Business Research Division at the Leeds School of Business, University of Colorado Boulder) 2.2020-2021 Financial Results and Implications (Kara Skinner, Interim Chief Financial Officer) 3.Fund Balance & Emergency Reserves (Kara Skinner) 4.2022 & 2023 Budget Projections (Mark Woulf, Senior Budget Manager) 5.2023 Budget Process & Boulder OpenGov (Mark Woulf) 6.Council Questions/Discussion Boulder Sales and Use Tax Forecast March 2022 Report Robert McNown Richard Wobbekind Brian Lewandowski Business Research Division University of Colorado Boulder May 24, 2022 The Study The purpose of this study is to continue providing an econometrically derived tax forecast to the City of Boulder to inform the Finance office about expected changes in sales, use, and property tax collections in the short term (one-to-two years) and medium term (five years). The University of Colorado A Line. Photo courtesy of RTD. U.S. Real GDP Source: Bureau of Economic Analysis and Consensus Forecasts. 15 16 17 18 19 20 21 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q4 2019 Q3 Q3 2020 Q1 -31.2% SAAR -9.1% YoY +33.8% SAAR -2.9% YoY Consumption Investment Net Exports FederalState and local Q4 -1.4% SAAR +3.6% YoY Q2 Q1 Q1 2022 U.S. Quarterly GDP, $ Trillions U.S. Nonfarm Employment Source: Bureau of Labor Statistics, CES (Seasonally Adjusted). 130 135 140 145 150 155 2017 2018 2019 2020 2021 2022 Jan. 2017 145.6 million Feb. 2020 152.5 million April 2022 151.3 million April 2020 130.5 million March 2020 151 million 0 DETAIL U.S. Nonfarm Employment, Monthly, Millions of Jobs Months to Recovery from Recessions Source: Bureau of Labor Statistics (Seasonally Adjusted). -16 -14 -12 -10 -8 -6 -4 -2 0 0 6 12 18 24 30 36 42 48 54 60 66 72 Percent Number of Months Since Peak 2008-20142001-051990-931981-831974-761980 2020-2022?-6.3% -0.8% U.S. Nonfarm Employment, Number of Months Since Recession Peak Employment Recovery Source: Bureau of Labor Statistics, Current Employment Statistics (Seasonally Adjusted), as of April 2022. Change from Prerecession Peak 0 1 2 3 4 0 1 2 3 4 0 1 2 3 4 Federal Funds Rate Outlook 2022 2023 Longer Run Current Target Range Source: Federal Reserve, March 2022 Meeting. 2024 March 2022 Meeting December 2021 Meeting September 2021 Meeting Inflation Source: Bureau of Labor Statistics (March 2022). Forecast from Consensus Forecasts. Consumer Price Index, Percent Change Year-Over-Year 0 1 2 3 4 5 6 7 8 9 Mar 20 Oct 20 May 21 Dec 21 Jul 22 Feb 23Percent Change YoYNational CPI: All Items May July October December February March Items U.S. City Average Mountain Denver- Aurora- Lakewood Item Weights All items 8.5%10.4%9.1%100.0% Food and beverages 8.5%8.7%8.8%14.3% Housing 6.4%9.7%7.9%42.4% Apparel 6.8%12.1%3.9%2.5% Transportation 22.6%22.4%21.7%18.2% Medical care 2.9%4.0%7.6%8.5% Recreation 4.8%6.5%6.7%5.1% Education and Comm.1.5%0.0%-1.6%6.4% Other goods and services 5.5%7.1%9.6%2.7% Core Inflation 6.5%9.0%8.0% Source: Bureau of Labor Statistics, CPI for All Urban Consumers (CPI-U). Colorado Rank Among Other States Data Sources: Bureau of Economic Analysis (2021), Bureau of Labor Statistics (2/22), U.S. Census Bureau (2020), Bureau of Labor Statistics (2022), Federal Housing Finance Agency All Transactions Index (Q4 2021), BRD calculations. *Unemployment rate for the last month. Metric 1-Year 3-Year 5-Year 10-Year Real GDP Growth 12 11 8 5 Employment Growth 13 10 8 6 Population Growth 12 9 9 7 Personal Income Growth 7 16 5 4 PCPI Growth 7 16 3 5 PCPI 8 11 12 21 Average Hourly Wage % Growth 1 17 10 31 Average Annual Pay % Growth 27 10 10 10 Average Annual Pay 8 9 11 12 Unemployment Rate 28 15 9 26 Labor Force % Growth 7 5 4 3 LFPR 3 4 7 10 FHFA Home Price Index Growth 20 16 13 8 National Retail and Food Services Sales 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022$ Millions-13% peak to trough, 41 months to return to peak -22% peak to trough, 5 months to return to peak March 2022: +28.8% from prior peak +7.8% year-over-year +0.9% month-over-month Source: U.S. Census Bureau. Sales Tax Collections State of Colorado 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 0 50 100 150 200 250 300 350 400 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021$ Millions, 12-Month Rolling Sum$ Millions, 12-Month Rolling SumSource: Colorado Department of Revenue. April (12 Mo.) YoY: 17.5% Industry composition Tourism Commuters Retail mix Development Population growth State Net Taxable Sales by County Source: Colorado Department of Revenue.DenverWeldAdamsArapahoeBroomfieldBoulderJeffersonLarimerMesaPuebloEl PasoDouglasTeller-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2021 compared to 2019 City of Boulder Forecast Note: Baseline Forecast uses Moody’s S2 Scenario. National Economy Colorado Economy Boulder Economy Boulder Sales Tax Revenue Boulder Use Tax Revenue The Model Data and Sources Bureau of Economic Analysis (e.g., personal income, GDP) Bureau of Labor Statistics (e.g., employment, wages) U.S. Census Bureau (e.g., retail sales, population) Colorado State Demography Office (population, migration, age) Moody’s Analytics (macroeconomic variables forecast) Colorado Department of Revenue (sales taxes) Office of the State Controller (taxes) City of Boulder (sales, use, property taxes) U.S. Economic Assumptions Percent Change, Year-over-Year YEAR CONSUMER PRICES RETAIL TRADE REAL GDP UNEMPLOYMENT RATE EMPLOYMENT PERSONAL INCOME 2018 2.4 4.3 2.9 3.9 1.6 5.1 2019 1.8 3.3 2.3 3.7 1.3 4.1 2020 1.3 0.3 -3.4 8.1 -5.8 6.5 2021 4.7 19.4 5.7 5.4 2.8 7.4 2022 6.1 6.3 2.3 5.0 1.6 -1.0 2023 2.7 2.9 1.4 4.6 1.2 3.1 2024 2.2 4.1 3.0 3.6 1.8 5.6 2025 2.3 3.0 2.6 3.9 0.3 4.8 2026 2.3 3.2 2.7 4.1 0.3 4.6 Note: Baseline Forecast uses Moody’s S2 Scenario. Colorado Economic Assumptions Percent Change, Year-over-Year YEAR CONSUMER PRICES RETAIL TRADE PERSONAL INCOME UNEMPLOYM ENT RATE EMPLOYMENT 2018 2.7 6.1 7.2 3.0 2.5 2019 1.9 3.4 5.6 2.7 2.3 2020 2.0 4.9 5.7 7.3 -5.2 2021 3.5 14.6 9.0 5.9 2.8 2022 8.9 1.6 2.7 5.3 2.4 2023 4.3 3.8 5.2 4.8 2.0 2024 3.0 5.6 8.3 3.5 2.7 2025 3.0 4.4 8.1 3.8 1.5 2026 3.0 4.6 8.3 4.0 1.6 Note: Baseline Forecast uses Moody’s S2 Scenario. Component Projections Percent Change, 2022 Note: Baseline Forecast uses Moody’s S2 Scenario. **First revenue year. Component % Change Grocery 16.0 Restaurant 20.9 Computer Related -23.6 Auto Sales 2.0 Building Materials 15.2 Mfo Sales 8.7 Out Of State Sales (Less Mfo)3.7 Other Sales 13.9 Total Sales Taxes 10.7 Short-Term Sales and Use Revenue Forecast 20 25 30 35 40 45 50 55 60 2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1 2022Q3 2023Q1 2023Q3Nominal, Millions of DollarsMedium Low Forecast High Forecast Note: Quarterly forecast excludes property taxes. Medium-Term Total Revenue Forecast 150 170 190 210 230 250 270 290 310 330 350 2018 2019 2020 2021 2022 2023 2024 2025 2026Nominal, Millions of DollarsMedium Low Forecast High Forecast Forecasts are updated to reflect the most current economic situation. Forecasts may be too high or too low, reflecting uncertainty in the economy. Forecasts are generated from theoretically sound economic relations, modeled with state-of-the-art methods of modern econometric time series analysis. BRD forecasts do not incorporate “add factors” or other subjective adjustments of model forecasts. Integrity of Model Forecasts Consumption COVID Variants Human Behavior Rural Migration Birth Rates Work from Home Ukraine Conflict Inflation Supply Chain Disruptions Worker Shortages Fed Policy Labor Participation Energy Prices Drought Vaccine Retail Sales Technology Wage Growth Infrastructure Spending Output Tailwinds Headwinds Unknowns Q&A •Pandemic Fiscal Impact •2021 Budget Uncertainty •Recovery Adjustments and Implications 2020-2021 Financial Results & Implications Finance Department – Financial Update & Budget Outlook City of Boulder Finance Department 2020 Pandemic Fiscal Impact Revenue Impacts •Sudden decline of revenue with stay- at-home orders & shut-downs •Tremendous uncertainty as to when revenues would recover •Actual revenue impact significant, but less than early projections –General Fund was down $15M •Strong use tax performance helped offset some of the retail sales tax impact Expenditure Saving Measures •Reduction in expenditures of $18.3 million (10.4% of approved 2020 budget) •Staffing and service reductions -56 layoffs -121 furloughs -103 vacancy holds -Non-standard: 68 terminations; 472 furloughs 25 City of Boulder Finance Department 2021 Budget Development & Organizational Recovery 2021 Budget Development •Conducted within a period of great uncertainty, prior to vaccines -2021 Budget was developed/approved June through October 2020, on the heels ofbudget reductions made in June 2020 •Adopted 2021 Budget was $341.7, a 7.6% decrease over originally adopted 2020 Budget Revenue Recovery & Federal Support •December 2021 Sales Tax Revenue increased $19.7 million or 19.0% compared to 2020 -Apparel stores (up 39.6%), Eating Places (up 36.9%), and General Retail (up 32.3%) all showed strong recovery •Parking revenues up 17.6% over 2020 (down 43.6% from pre-pandemic levels) •Accommodations Tax revenue up $3.1 million from 2020 (down 37.5% from pre-pandemic levels) •$3.98 million in ARPA appropriated in 2021 ($20.1 million over two years available) 26 City of Boulder Finance Department 2021 Original Budget & Recovery Efforts 27 City of Boulder Finance Department $158.7 $148.1 $170.0 $167.2$172.0 $157.8 $153.9 $171.2 $50 $70 $90 $110 $130 $150 $170 $190 2019 Actual 2020 Actual 2021 Actual 2022 Revised Total Revenues Total Expenditures General Fund: Actual Revenues & Expenditures Key takeaways: Previous fund balance after reserves has been applied to one-time uses Strong revenue performance and expenditure savings led to large fund balance contribution in 2021 Some draw expected in 2022 for one-time uses 28 $13.4 draw $9.6 draw $16.1 contrib. $4.0 draw City of Boulder Finance Department $158.7 $148.1 $170.0 $167.2$172.0 $157.8 $153.9 $171.2 $50 $70 $90 $110 $130 $150 $170 $190 2019 Actual 2020 Actual 2021 Actual 2022 Revised Total Revenues Total Expenditures General Fund: Actual Revenues & Expenditures Key takeaways: Previous fund balance after reserves has been applied to one-time uses A fund balance draw was necessary in 2020 as a result of the pandemic 29 $13.4 draw $9.6 draw $16.1 contrib. $4.0 draw City of Boulder Finance Department $158.7 $148.1 $170.0 $167.2$172.0 $157.8 $153.9 $171.2 $50 $70 $90 $110 $130 $150 $170 $190 2019 Actual 2020 Actual 2021 Actual 2022 Revised Total Revenues Total Expenditures General Fund: Actual Revenues & Expenditures Key takeaways: Previous fund balance after reserves has been applied to one-time uses A fund balance draw was necessary in 2020 as a result of the pandemic Strong revenue performance and expenditure savings led to $16.1M fund balance contribution in 2021 30 $13.4 draw $9.6 draw $16.1 contrib. $4.0 draw City of Boulder Finance Department $158.7 $148.1 $170.0 $167.2$172.0 $157.8 $153.9 $171.2 $50 $70 $90 $110 $130 $150 $170 $190 2019 Actual 2020 Actual 2021 Actual 2022 Revised Total Revenues Total Expenditures General Fund: Actual Revenues & Expenditures Key takeaways: Previous fund balance after reserves has been applied to one-time uses A fund balance draw was necessary in 2020 as a result of the pandemic Strong revenue performance and expenditure savings led to $16.1M fund balance contribution in 2021 Some draw expected in 2022 for one-time uses 31 $13.4 draw $9.6 draw $16.1 contrib. $4.0 draw •Reserve & Fund Balance Definitions •General Fund Emergency Reserve History •General Fund 2021 Performance •Policy Implications Fund Balance & Emergency Reserves Finance Department – Financial Update & Budget Outlook City of Boulder Finance Department •Emergency Reserves. Unappropriated, designated funds for use in the event of a major revenue disruption or emergency. •Restricted Reserves. Unappropriated, designated funds that have a specific restricted use based on the revenue type and source. •Fund Balance After Reserves. Unappropriated, undesignated funds that can be used for general purposes. Fund Balance Definitions 33 City of Boulder Finance Department $25.6 $23.1 $27.0 $30.3 $31.4 $15.0 $7.9 $11.8 $7.3 $8.1 $10.3 $0.0 $2.3 $19.7 $13.8 $0 $10 $20 $30 $40 $50 $60 2019 Actuals 2020 Revised 2020 Actuals 2021 Actuals 2022 Outlook Emergency Reserves Restricted Reserves Fund Balance After Reserves 19.5%16.7%19.5% General Fund –Fund Balance History -$ Millions Key takeaways: Anticipated exhaustion of emergency reserves in 2020 did not come to fruition –emergency reserve levels have stayed consistent 2021 revenue and expenditure performance drove contribution to fund balance 34 19%19.5% City of Boulder Finance Department $25.6 $23.1 $27.0 $30.3 $31.4 $15.0 $7.9 $11.8 $7.3 $8.1 $10.3 $0.0 $2.3 $19.7 $13.8 $0 $10 $20 $30 $40 $50 $60 2019 Actuals 2020 Revised 2020 Actuals 2021 Actuals 2022 Outlook Emergency Reserves Restricted Reserves Fund Balance After Reserves 19.5%16.7%19.5% General Fund –Fund Balance History -$ Millions Key takeaways: Anticipated exhaustion of emergency reserves in 2020 did not come to fruition –emergency reserve levels have stayed consistent 2021 revenue and expenditure performance drove contribution to fund balance 35 19%19.5% City of Boulder Finance Department $25.6 $23.1 $27.0 $30.3 $31.4 $15.0 $7.9 $11.8 $7.3 $8.1 $10.3 $0.0 $2.3 $19.7 $13.8 $0 $10 $20 $30 $40 $50 $60 2019 Actuals 2020 Revised 2020 Actuals 2021 Actuals 2022 Outlook Emergency Reserves Restricted Reserves Fund Balance After Reserves 19.5%16.7%19.5% General Fund –Fund Balance History -$ Millions Key takeaways: Anticipated exhaustion of emergency reserves in 2020 did not come to fruition –emergency reserve levels have stayed consistent 2021 revenue and expenditure performance drove contribution to fund balance 36 19%19.5% City of Boulder Finance Department $25.6 $23.1 $27.0 $30.3 $31.4 $15.0 $7.9 $11.8 $7.3 $8.1 $10.3 $0.0 $2.3 $19.7 $13.8 $0 $10 $20 $30 $40 $50 $60 2019 Actuals 2020 Revised 2020 Actuals 2021 Actuals 2022 Outlook Emergency Reserves Restricted Reserves Fund Balance After Reserves 19.5%16.7%19.5% General Fund –Fund Balance History -$ Millions Key takeaways: Anticipated exhaustion of emergency reserves in 2020 did not come to fruition –emergency reserve levels have stayed consistent 2021 revenue and expenditure performance drove contribution to fund balance 37 19%19.5% City of Boulder Finance Department $25.6 $23.1 $27.0 $30.3 $31.4 $15.0 $7.9 $11.8 $7.3 $8.1 $10.3 $0.0 $2.3 $19.7 $13.8 $0 $10 $20 $30 $40 $50 $60 2019 Actuals 2020 Revised 2020 Actuals 2021 Actuals 2022 Outlook Emergency Reserves Restricted Reserves Fund Balance After Reserves 19.5%16.7%19.5% General Fund –Fund Balance History -$ Millions Key takeaways: Anticipated exhausting fund balance after reserves & tapping in to emergency reserves in 2020 did not come to fruition – emergency reserve levels have stayed consistent 2021 revenue and expenditure performance drove contribution to fund balance 38 19%19.5% City of Boulder Finance Department •Emergency Reserve Level -“One-time” expense of $800,000 -$900,000 in 2022 to achieve 20% level -Ongoing expense beginning in 2023 is incremental (based on future year’s ongoing expenses) •Use of fund balance after reserves -Best practice is for one-time uses -Some appropriated with ATB1 2022 -Recommended Budget will consider fund balance availability Policy Implications for 2022/2023 Budget 39 •2022 & 2023 Major Revenue Source Outlook •Retail Sales Tax Performance •Budget Projections & Implications 2022-2023 Budget Projections Finance Department – Financial Update & Budget Outlook City of Boulder Finance Department 2022 & 2023 Major Revenue Sources Outlook •Retail Sales Tax -Revised 2022 retail sales tax revenues projected to exceed budget by $3.5 -$7.8 million -Projected 2023 revenues could exceed 2022 budget by $8.5 –$13.8 million •Property Tax -2022 property tax collections on track to budget -SB21-293 temporarily reduces residential assessment rates o Likely impact of -1.5% to original 2023 assumption •Accommodations Tax -Updated 2022 budget for accommodations tax is $7.0 million, up 9% more than 2021 actuals -Occupancy is currently up 13% YTD over 2021 (down 5% from pre-pandemic levels) •Other Taxes -2022 collections of business use tax (9%) and marijuana tax (15%) are down from original projections YTD over 2021 actuals -Construction use tax is up $1 million YTD over 2021 actuals 41 City of Boulder Finance Department 2022 & 2023 Major Revenue Sources Outlook •Retail Sales Tax -Revised 2022 retail sales tax revenues projected to exceed budget by $3.5 -$7.8 million -Projected 2023 revenues could exceed 2022 budget by $8.5 –$13.8 million •Property Tax -2022 property tax collections on track to budget -SB21-293 temporarily reduces residential assessment rates o Likely impact of -1.5% to original 2023 assumption •Accommodations Tax -Updated 2022 budget for accommodations tax is $7.0 million, up 9% more than 2021 actuals -Occupancy is currently up 13% YTD over 2021 (down 5% from pre-pandemic levels) •Other Taxes -2022 collections of business use tax (9%) and marijuana tax (15%) are down from original projections YTD over 2021 actuals -Construction use tax is up $1 million YTD over 2021 actuals 42 City of Boulder Finance Department 2022 & 2023 Major Revenue Sources Outlook •Retail Sales Tax -Revised 2022 retail sales tax revenues projected to exceed budget by $3.5 -$7.8 million -Projected 2023 revenues could exceed 2022 budget by $8.5 –$13.8 million •Property Tax -2022 property tax collections on track to budget -SB21-293 temporarily reduces residential assessment rates o Likely impact of -1.5% to original 2023 assumption •Accommodations Tax -Updated 2022 budget for accommodations tax is $7.0 million, up 9% more than 2021 actuals -Occupancy is currently up 13% YTD over 2021 (down 5% from pre-pandemic levels) •Other Taxes -2022 collections of business use tax (9%) and marijuana tax (15%) are down from original projections YTD over 2021 actuals -Construction use tax is up $1 million YTD over 2021 actuals 43 City of Boulder Finance Department Retail Sales Tax Performance & Projections (in Millions) 44 2021 Actuals 0.5% higher than 2022 original budget 2022 Revised projections reflect strong YTD performance 2023 Projected is currently the average of the medium and low models from CU – likely too cautious 51.6 47.0 56.4 59.8 60.1 22.2 20.2 24.2 25.7 25.8 21.6 19.7 23.6 25.0 25.2 8.6 7.9 9.5 10.0 10.1 7.2 6.6 7.9 8.3 8.4 $0 $20 $40 $60 $80 $100 $120 $140 2019 Actuals 2020 Actuals 2021 Actuals 2022 Revised 2023 Projected General Fund Open Space Transportation CCRS 0.25 Parks/Rec City of Boulder Finance Department Retail Sales Tax Performance & Projections (in Millions) 45 2021 Actuals 0.5% higher than 2022 original budget 2022 Revised projections reflect strong YTD performance 2023 Projected is currently the average of the medium and low models from CU – likely too cautious 51.6 47.0 56.4 59.8 60.1 22.2 20.2 24.2 25.7 25.8 21.6 19.7 23.6 25.0 25.2 8.6 7.9 9.5 10.0 10.1 7.2 6.6 7.9 8.3 8.4 $0 $20 $40 $60 $80 $100 $120 $140 2019 Actuals 2020 Actuals 2021 Actuals 2022 Revised 2023 Projected General Fund Open Space Transportation CCRS 0.25 Parks/Rec City of Boulder Finance Department Retail Sales Tax Performance & Projections (in Millions) 46 2021 Actuals 0.5% higher than 2022 original budget 2022 Revised projections reflect strong YTD performance 2023 Projected is currently the average of the medium and low models from CU – likely overly cautious 51.6 47.0 56.4 59.8 60.1 22.2 20.2 24.2 25.7 25.8 21.6 19.7 23.6 25.0 25.2 8.6 7.9 9.5 10.0 10.1 7.2 6.6 7.9 8.3 8.4 $0 $20 $40 $60 $80 $100 $120 $140 2019 Actuals 2020 Actuals 2021 Actuals 2022 Revised 2023 Projected General Fund Open Space Transportation CCRS 0.25 Parks/Rec City of Boulder Finance Department 2023 Budget Approach 47 Projections, Risk Posture, and Revenue Performance •Revenues have consistently performed above original projections •Cautious budgeting approach balanced with realistic projections •Risk tolerance will impact budget development 2022 Adjustments –Ongoing & One-Time Impact •Some flexibility limited by 2022 adjustments •More ongoing costs (e.g.new personnel) added in ATB1 •Consideration of other fund balance after reserves 2023 Budget Process •Budget process improvements •New or continued investments with context & prioritization •Move toward an “Outcome-Based Approach” City of Boulder Finance Department 2023 Budget Approach 48 Projections, Risk Posture, and Revenue Performance •Revenues have consistently performed above original projections •Cautious budgeting approach balanced with realistic projections •Risk tolerance will impact budget development 2022 Adjustments –Ongoing & One-Time Impact •Some flexibility limited by 2022 adjustments •More ongoing costs (e.g.new personnel) added in ATB1 •Consideration of other fund balance after reserves 2023 Budget Process •Budget process improvements •New or continued investments with context & prioritization •Move toward an “Outcome-Based Approach” City of Boulder Finance Department 2023 Budget Approach 49 Projections, Risk Posture, and Revenue Performance •Revenues have consistently performed above original projections •Cautious budgeting approach balanced with realistic projections •Risk tolerance will impact budget development 2022 Adjustments –Ongoing & One-Time Impact •Some flexibility limited by 2022 adjustments •More ongoing costs (e.g.new personnel) added in ATB1 •Consideration of other fund balance after reserves 2023 Budget Process •New or continued investments with context & prioritization •Budget process improvements •Move toward an “Outcome-Based Approach” •Budgeting for Resilience •Process Improvement Overview •Program-Based Budgeting •Introduction of Boulder OpenGov 2023 Budget Process Improvements & Boulder OpenGov Finance Department – Financial Update & Budget Outlook City of Boulder Finance Department Boulder Budgeting for Community Resilience (BFCR) City received DOLA grant in 2018 to improve resilience through budgeting City retained HRA Advisors to develop a framework Final report was issued in 2019 that recommended several key items Full implementation was paused due to COVID Some elements were integrated into budget process for 2021 budget City of Boulder Finance Department BFCR Final Report Recommendations Develop Department Outcomes and KPIs Embed Outcomes and KPIs into Budget Process Create Annual Budget Priority Document and Evaluation Approach Link Council Priorities to Citywide Outcome Indicators City of Boulder Finance Department Why Now? Purpose of Budget Process Improvements Solidify Foundational Process Improved Strategic Decision-Making Greater Focus on Outcomes of Funding Greater Organizational Alignment Improved Transparency & Accessibility City of Boulder Finance Department Adapting BFCR to Current Needs Current state Departmental-based budgeting Capital Improvement Plan (CIP) & Operating Budget developed separately Orientation around department-specific goals Decision-making at margins Outcomes and budgeting are mutually exclusive Future state Program-oriented budgeting Orientation around citywide goals CIP & operating alignment and strategic funding Holistic and goal-oriented decision- making Outcomes and indicators are embedded in budgeting process City of Boulder Finance Department Adapting BFCR to Current Needs Current state Departmental-based budgeting Capital Improvement Plan (CIP) & Operating Budget developed separately Orientation around department-specific goals Decision-making at margins Outcomes and budgeting are mutually exclusive Future state Program-oriented budgeting Orientation around citywide goals CIP & operating alignment and strategic funding Holistic and goal-oriented decision- making Outcomes and indicators are embedded in budgeting process City of Boulder Finance Department Recommended Implementation Elements Citywide program & project inventory and alignment Revised budget process and enhanced decision- making process Development of outcomes & key performance indicators Implementation of new budgeting & Transparency tool City of Boulder Finance Department Program Budgeting & Budget Proposals Program Realignment •First step was to articulate our operating budget activities in terms of a program •Programs should align with citywide goals and indicate clear intended outcomes -Continuing to embed equity within program goals •Outcomes should be measurable with the goal of developing citywide Key Performance Indicators (KPIs) Budget Proposals •Department budget submissions to Executive Budget Team (EBT) by Program and Capital Project and by type (enhancement, realignment, reduction) •Broader picture of city activities allows improved strategic decision-making at EBT level •Recommended budget will be able to articulate how proposed investments will better meet our intended outcomes 57 City of Boulder Finance Department Program Budgeting & Budget Proposals Program Realignment •First step was to articulate our operating budget activities in terms of a program •Programs should align with citywide goals and indicate clear intended outcomes -Continuing to embed equity within program goals •Outcomes should be measurable with the goal of developing citywide Key Performance Indicators (KPIs) Budget Proposals •Department budget submissions to Executive Budget Team (EBT) by Program and Capital Project and by type (enhancement, realignment, reduction) •Broader picture of city activities allows improved strategic decision-making at EBT level •Recommended budget will be able to articulate how proposed investments will better meet our intended outcomes 58 City of Boulder Finance Department Towards Performance & Budget Year 1 •Comprehensive Program Inventory •Budget Proposals establish intended outcomes •Enhanced Decision-Making Process Year 2 •All Programs Specify Intended Outcomes and Associated Measurements •Citywide KPIs are Identified Year 3 •KPIs are Utilized to Guide Budget Decisions •Focus on Realignment of Resources to Achieve Intended Outcomes City of Boulder Finance Department Boulder OpenGov Demo Previous Budget Software •Extremely manual, spreadsheet analysis, opaque information •Transparency required manual publishing of graphs, charts into PDF •No actual budget performance data without manual report production •No language accessibility OpenGov •Cloud-based 21st Century solution •Much more approachable for budget staff and greater visibility of reports •Actuals reporting –both internally and publicly •Online budget book •Transparency Portal •Language accessibility 60 City of Boulder Finance Department Boulder OpenGov Demo Previous Budget Software •Extremely manual, spreadsheet analysis, opaque information •Transparency required manual publishing of graphs, charts into PDF •No actual budget performance data without manual report production •No language accessibility OpenGov •Cloud-based 21st Century solution •Much more approachable for budget staff and greater visibility of reports •Actuals reporting –both internally and publicly •Online budget book •Transparency Portal •Language accessibility 61 City of Boulder Finance Department Council Questions/Feedback? 62 City of Boulder Finance Department Backpocket slides 63