The Lens Mail - Fwd: 2019 Budget Inaccuracies https://mail.google.com/mail/u/0/?ui=2&ik=868cdf3f73&jsver=U... Thank you for working with our team through our first budget process, it certainly has been a challenge at every corner. The budget book that was provided to you contained clerical errors that caused a great deal of confusion. I apologize it was sent in this form and fashion. We are currently making changes to ensure this error does not a occur in the future. Attached you will find the corrected table. The current table that did not reflect complete data from 2017 that rippled into 2018 and was not an accurate comparison when compared with the 2019 proposed numbers. A great deal of our attention was focused on 2019 revenues and expenditures which has not changed. I have attached the correct tables that contain data from 2017 actuals, 2018 current budget and 2019 forecast as described below: · 2017 contains actual expenditures and revenue · The 2018 Adopted contains revenue and expenditure budgets in place on the freeze date. · The revenue side includes the initial budget (2018 REC official forecast from December 1, 2017), along with mid-year adjustments from ordinances adopted through the freeze date for a total of $686,152,553. Since the freeze date, additional ordinances have been passed totaling $5,739,676 for a current date total of $691,892,229. The revenue budget and expenditure budget are balanced. · The REC forecast for 2018 is not the same as the revenue budget for 2018. Increases in 2018 revenue from the July or October forecasts are not included in this figure, unless they corresponded to one of the revenue ordinances · 2019 Proposed represents the 2019 Revenue forecast from the October 31, 2018 REC and, on the expenditure side, the proposed budget under discussion. As mentioned, I and my staff will be available throughout the budget hearing process to answer any questions you may have and help alleviate any confusion this may have caused. Additionally, I wanted to address the question of contingencies as described in the your email. None of the budget is based upon contingency dollars. All sources of revenue have some element of variation from year to year. Through the REC, we determine a likely amount of revenue that the City would receive in 2019. Based on this estimate, we then propose expenditures equal to that amount. The budget must be closely monitored throughout the year as revenue sources do change and we may receive more or less than expected. Ultimately, the budget is not based on a contingent amount – it is based on our best known projections of revenue. After REC vetting and adoption, we fully expect all revenue to materialize, whether it comes from a stronger economy boosting the base or new initiatives that are expected to generate revenue. However, there is always some amount of uncertainty in any estimate. For instance, there is strong support everywhere for increasing governmental revenues due to the Wayfair decision, and this forecast increases sales tax by $3M because of it. We will not know whether that estimate is realistic until the new system is in place at the state and distributions begin. The outcome could be $1M or $7M. There is no way to know with certainty until the data appears. There are several other revenue streams that face a similar outlook in this forecast. Due to this consideration, it is most prudent to take a careful and measured approach to this types of uncertainty, which we 2 of 4 11/9/18, 3:17 PM The Lens Mail - Fwd: 2019 Budget Inaccuracies https://mail.google.com/mail/u/0/?ui=2&ik=868cdf3f73&jsver=U... feel has been done with this budget and the anticipated management of it. We have built into the forecast modest underlying growth that could allow us to offset the use of fund balance as we make our way through the budget year. Even if the economy does slow slightly in 2019, we have projected a positive unassigned fund balance after assuming the expenditure of the entire proposed budget, which includes $21M in fund balance use. In addition, there are always unexpected revenue sources that appear during the year which also help mitigate any revenue projection inaccuracies. In fact, there are several that have been identified even since the REC. As in any budget, if it appears that anticipated revenue will not materialize, we will make the necessary adjustments either through the use of alternative means of finance or by setting limits on expenditures. Since the implementation of some of the new initiatives are ramping up now, it should be possible early in the fiscal year to determine whether some of the projected revenue is on target. Other initiatives will require more time. In tandem with monthly reports to the committee, the budget will be watched closely throughout the year in order to best manage any uncertainty on the revenue or the expenditure side. Lastly, I just want to re-iterate, this budget still does not account for any savings that the zero-based budgeting process may realize over the course of the year. I would be happy to meet with you or any other Councilmembers and staff to further discuss this concept and clarify exactly the issues you would like addressed on Friday. Sincerely, Gilbert A. Montano Chief Administrative Officer City of New Orleans 1300 Perdido Street Suite 9E06 New Orleans, LA 70112 (o) 504.658.8606 (e) Gilbert.Montano@nola.gov PRIVILEGED AND CONFIDENTIAL COMMUNICATION This electronic transmission and any documents attached hereto may contain confidential and/or legally privileged information. The information is intended only for use by the recipient named above. If you have received this electronic message in error please notify the sender and delete the electronic message. Any disclosure, copying, distribution, or use of the contents of information received in error or otherwise is strictly prohibited. -----Original Message----From: Jared C. Brossett Sent: Wednesday, November 7, 2018 4:08 PM To: Gilbert A. Montaño Cc: Jason R. Williams ; Helena N. Moreno ; Joseph I. Giarrusso ; Jay H. Banks ; Kristin G. Palmer ; Cyndi Nguyen ; Domonique C. Dickerson 3 of 4 11/9/18, 3:17 PM The Lens Mail - Fwd: 2019 Budget Inaccuracies https://mail.google.com/mail/u/0/?ui=2&ik=868cdf3f73&jsver=U... ; Calvin J. Aguillard ; David S. Gavlinski Subject: 2019 Budget Inaccuracies Good afternoon Gilbert, Through the Council’s review of the proposed 2019 budget materials, it was brought to my attention from several Council offices that there appears to be inaccurate information in the budget book. Particularly, the table listing the Statement of Revenues and the related graphs contain data that is incorrect. Please provide corrected materials, as soon as possible, for any information that has been identified as incorrect. In this material, contingencies should be specifically defined since the Administration is recognizing new revenues that may not be realized. In addition, please be prepared to appear before the Council at the beginning of Fridays scheduled hearing to address these issues. Thank you and your staff for your work in preparing the budget book. Regards, Jared Councilmember Jared C. Brossett, District D 1300 Perdido St., Rm 2W20 New Orleans, LA 70112 Office: 504-658-1040 Fax: 504-658-1048 Sent from my iPhone 2 attachments ATT00001.htm 1K Updated Front Tables 11-8-2018_v2.pdf 160K 4 of 4 11/9/18, 3:17 PM