2023-62 Ordinance Amending the 2022 Budget Reconciliation Ordinance of the City of Decatur, Illinois

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Financial Management DATE: 9/18/2023 MEMO: TO: Honorable Mayor Moore Wolfe City Council Members FROM: Scot Wrighton,City Manager Ruby James,City Treasurer&CFO SUBJECT: An Ordinance Amending the 2022 Budget Reconciliation Ordinance of the City of Decatur,Illinois SUMMARY RECOMMENDATION: City Administration recommends City Council approval of the attached Ordinance. BACKGROUND: City Council adopted the Fiscal Year 2022 Budget and Appropriation Ordinance for the purpose of defraying the expenses of certain departments and funds of the City of Decatur for the fiscal year beginning January 1, 2022 and ending December 31, 2022. On December 19th 2022, and again for Fiscal Year 2022, the City Council approved an ordinance to amend the 2022 budget to reconcile the budget and appropriate additional funds for operational expenditures for the City to effect provision of services to its citizens which were not anticipated at the time of adoption. Passage of a budget reconciliation ordinance every December is a regular part of closing out and properly ending a fiscal year. On June 20, 2023, again for Fiscal Year 2022,the City Council approved an ordinance to amend the 2022 budget and close-out and finalize the reconciliation of the fiscal year that ended December 31,2022. Now the City Council is asked to again amend the 2022 Budget Reconciliation Ordinance to allocate the $10 million of revenue replacement funds related to the American Rescue Plan Act (ARPA) for public safety expenses, specifically police and fire salaries. The Federal Government released the funds for the American Rescue Plan Act in 2021,requesting that municipalities spend the funds on significant projects to help communities. The revenue replacement funds of$10 million was a standard allowance that could be used for revenue that was lost to the city due to the pandemic conditions present in the economy. These "replacement" funds were to be used for any service traditionally provided by a govemment. The City of Decatur filed that the revenue replacement funds were used for government services in 2022 for quarters 1 and 2, in accordance with the council's ARP spending plan. As is often the case,the Federal Government altered their audit requirements as ARP proceeded,and they changed the details of how they wanted the funds documented during the two and half years following enactment of the ARP Act in March 2021,and continued to make compliance changes after they released the funds to local governments. In order to meet the auditing requirements now imposed by the Federal government,the City Council must now adopt a resolution formally stating that the City used the$10 million of revenue replacement funds for general government services. Since receiving its first ARP payment in 2021,the City has been transparent about how the funds would be spent,and has included extra explanatory notes in its adopted budget to further clarify how and where ARP funds are used for various governmental purposes noted in the original legislation. This will continue to be a feature of the city budget in 2024. As the Treasury Department developed its compliance requirements,how cities used the "revenue replacement"portion of ARP proceeds was different than compliance for"non-revenue replacement." This action releases $10 million of expenses into fund balance to be available for spending on projects already identified by the City Council for use of ARPA funds. This amendment does not create any new ARP funds to be available,and it does not alter