Page 408 - Keller Budget FY21

Fiscal Management Contingency Plan

The contingency plan is a planning document that will be used in the event there is a downturn in economic
conditions that will negatively impact the City of Keller budget. The City is dependent on a stable, growing
economy so that budgeted revenues will be realized. It is essential that the City of Keller constantly monitor
economic conditions and any possible negative impacts on the City's revenues.

The fiscal management plan will assist City management in guiding future planning efforts. The Plan is a
guide only, and is intended to assist in budget balancing strategies. Depending upon management's
response to economic and financial conditions, some parts of the plan may be implemented sooner or later,
in accordance with direction from the City Council. Economic and budget conditions will be evaluated
monthly, and any budget impacts resulting from economic conditions or trends will be identified.

Throughout the contingency plan process, the goal is to protect current service levels, while continuing to
provide competitive pay and benefits to all employees.

Budgetary Revenue Shortfall Contingency Plan

A. The City will establish a plan to address economic situations that cause revenue to be significantly less
than the adopted budget revenue. The plan is comprised of the following components:

Indicators: Serve as warnings that potential budgetary revenue shortfalls are increasing in probability.
Staff will monitor state and national economic indicators to identify recessionary or
inflationary trends that could negatively impact consumer spending or property values.
Levels: Serve to classify and communicate the severity of the estimated budgetary revenue
shortfalls and identify the actions to be taken at the given phase.
Actions: Preplanned steps to be taken in order to prudently address and counteract the estimated
budgetary revenue shortfall.

B. The actions listed in Levels I through IV are intended to be short-term in nature. In the event the
underlying economic situation is expected to last for consecutive years, more permanent actions will
be taken.

C. The City Manager or designee will apprise City Council at the regular City Council meeting immediately
following any action taken through this plan. Information such as underlying economic conditions,
economic indicators, estimated budgetary revenue shortfalls, actions taken and expected duration will
be presented to City Council.

D. The City Council may appropriate available fund balance as needed to cover any estimated revenue
shortfall. Appropriation of fund balance must be carefully weighed and long-term budgetary impacts
must be considered in conjunction with the projected length of the economic downturn.

E. Actions taken through this plan must always consider the impact on revenue generation. Actions taken
should reduce expenses well in excess of resulting revenue losses.

F. The following is a summary of classifications and the corresponding actions to be taken.

1. Level I: The estimated annual revenue is below budget projections for 3 consecutive months.
Current economic conditions and indicators may continue.
a. Expenditures:
i. Freeze newly created positions.
ii. Implement a time delay for hiring vacant positions.
b. Revenues:
i. Identify any potential new revenue sources.
c. Service Level Impacts:
i. Minor service level disruptions and/or delays.
ii. New projects may be postponed or deferred.
iii. Begin planning for Levels II through IV.

406