Revenue can fluctuate substantially within a given year or from year to year. There are very few sources of income over which the City has direct control. For example, the City has no control over property tax revenue; it can fluctuate depending on the number of homes sold in the community and the amount of building activity. The level of building activity also impacts other sources of revenue such as building permit fees. The City's largest amount of tax revenue is generated from the payroll at local businesses. These are revenues that have a somewhat direct relationship with the general state of our economy, or, in the case of occupational fees, the number of good paying jobs available in the community.
The City has a little more certainty and control over how much money is spent, but even that has some impacts and restrictions that reduce flexibility. The federal government and state government dictates additional expenses, such as Medicare contributions and required methods of compensating for overtime mandated by federal law. In addition, the City does not, in most cases, have the ability to stop doing things simply because it lacks the income. Police and fire protection are good examples. Even if revenue decreases substantially, the City still needs to staff fire stations and provide a minimum level of police patrol services.
It is important to remember that the numbers in the budget are estimates. Many things happen during the year that impact our income and spending. Revenues are estimated realistically to insure that there are adequate funds to meet needs. The City works to maintain adequate reserves to protect from future unknowns.