Page 72 - Southlake FY22 Budget

BUDGET OVErVIEW

BUILDInG THE BUDGET

of the Consumer Price Index (CPI) for the Dallas/Fort Worth Area, less food and energy. This includes any contract
increases, salary increases, or any expenses that relate to the current cost of doing business. Any expenses that are
service enhancements or unfunded legislative mandates are not included in this self-imposed limit. The CPI used in the
FY 2022 budget is shown in Figure 6. These are just some of the strategies that are used to manage expenses.

Maintaining Optimum Fund Balances
Another important financial goal is ensuring the maintenance of optimum fund balances in operating funds, in
accordance with City policy, which can be found in the Appendix. Maintaining proper reserves increases the
organization’s ability to absorb or respond to temporary changes in the environment or circumstances, such as an
unanticipated event or changes related to operating revenues. Per the Fund Balance Policy, the undesignated fund
balance in the General Fund should range between 15% and 25% of operating expenses. For FY 2022, 25.41% of
General Fund operating expenses are reserved for unanticipated or emergency needs.

Forecast Expenditures
The City of Southlake conducts a five year forecast for the General Fund, Utility Fund, Hotel Occupancy Tax Fund, and
sales tax funds. These forecasts reflect the annual projected expenditures required to sustain the current adopted level
of service, meet debt obligations, and the obligations of the adopted Capital Improvements Program. In addition to
forecasting using the assumptions shown in this section, the financial model conducts several scenarios to understand
the health of the fund in the event of an impact on revenues. The forecast for the General Fund is shown in the chart
below.

general fund five year finanCial fOreCasT*
fy 2022 - fy 2026
fy 2022 fy 2023 fy 2024 fy 2025 fy 2026
revenue PrOPOsed fOreCasT fOreCasT fOreCasT fOreCasT
BudgeT*

Revenues $49,563,909 $50,251,098 $50,620,291 $50,874,089 $51,089,355

Expenses $43,539,922 $45,584,116 $46,633,394 $47,555,156 $48,505,985
Surplus/ $6,023,987 $4,666,982 $3,986,897 $3,318,933 $2,583,370
(Deficit)

Net Transfers ($5,625,577) ($4,314,705) ($3,603,779) ($2,992,798) ($2,681,762)

Reserves $11,062,268 $11,414,545 $11,797,663 $12,123,798 $12,125,406

Reserves as a %
of Operating 25.41% 25.04% 25.30% 25.49% 25.00%
Expenses
*Forecast is not a budget, but is a preliminary estimate of FY 2022 to FY 2026 financial results.
Forecast Results
The FY 2022 to FY 2026 five year financial forecast indicates a structurally balanced budget, while aligning with the
City’s financial principles. Under this forecast, the City of Southlake does not anticipate the need for service reductions
to meet the needs of today’s service levels. This forecast is continually updated throughout the fiscal year to ensure
continued accuracy of these projections.

BUDGET BOOK | FY 2022 City of Southlake 71
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