ALAMEDA -- The City Council will consider adopting a two-year budget cycle starting next year as a way to promote better long-term planning and accountability when it meets Tuesday.

The city currently has an annual budget with a second-year forecast. If the council adopts a two-year cycle, however, officials will present the council with a status report, or a "mid-cycle review" during each fiscal year.

The advantages of switching include the time saved by not producing a budget each year, plus the longer cycle will likely boost employee morale because they will know their department or program has received longer-term funding, according to Fred Marsh, the city's controller.

The change will also allow city officials to focus more on fiscal planning, which officials say is important as they try to find ways to meet the city's ongoing financial challenges.

The challenges include paying for deferred maintenance, which now stands at about $9.5 million annually, and the growing cost for retiree medical benefits, which is expected to reach $150 million in the next 15 years.

Along with recommending the council adopt the two-year cycle, City Manager John Russo is asking that city departments be allowed to roll over 50 percent of any unused funds in their budgets at the end of the second fiscal year for once-off capital improvements.


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But Russo is also calling for the council to still have an option of amending a budget in the event of an emergency or natural disaster, significant changes in state or federal funding that were unknown when the budget was adopted, or there is at least a 3 percent decline in net revenue for the city's major funds.

Of the 91 cities in the nine Bay Area counties, 67 percent work with an annual budget cycle. Some 21 percent adopt an annual budget with a second year forecast -- what Alameda now does -- and 12 percent adopt two-year budgets.

It's difficult to determine how much money the city will save by switching to a two-year cycle, Marsh said. But he noted that planning and preparing a budget takes several months and involves employees at all city departments, and that savings are inevitable by engaging in the process every other year instead of annually.

Reach Peter Hegarty at 510-748-1654 or follow him on Twitter.com/Peter_Hegarty.

IF YOU GO
The City Council will meet at 7 p.m. Tuesday in the Council Chambers at City Hall, 2263 Santa Clara Ave.