The City of Beaufort’s financial policies are governed by South Carolina state law, the City Charter, and generally accepted accounting principles. These laws, principles and policies describe ways to amend the budget after adoption, provide for budget controls and budget reporting, and identify appropriate methods for budgeting, accounting and reporting.
The City Manager is authorized to transfer any sum from one budget line item to another, or from one department or org to another department or org; provided, however, that no such transfer shall:
1.Be made from one fund to another fund,
2.Conflict with any existing Bond Ordinance, or
3.Conflict with any previously adopted policy of the City Council.
Any change in the budget which would increase or decrease the total of all authorized expenditures must be approved by City Council.
The accounting policies of the City of Beaufort conform to generally accepted accounting principles (GAAP) as applicable for governmental units. The Governmental Accounting Standards Board (GASB) is the accepted body for establishing governmental accounting and financial reporting principles. The City’s budget is prepared using the modified accrual basis of accounting, which is a combination of cash basis and full accrual basis. It is also the same accounting basis used for the City’s audited financial statements. Revenues are recognized as soon as they are considered measurable and available. Measurable means that the dollar value of the revenue is known or can be reasonably estimated. Available means that it is collectible within the current period or soon enough after the end of the current period to pay current expenditure. The City considers certain revenues related to the current period to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred and not based on cash flow. All expenditures incurred during the current period are accrued and are general cash flowed within the 60 days as well. All appropriations lapse at year end; however, encumbrances and amounts specifically designed to be carried forward (i.e., multi-year capital projects and approved grants) to the subsequent year are re-appropriated in the following year.
The accounts of the City are organized on the basis of funds. Each is considered a separate accounting entity. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities.
The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues and expenditures. South Carolina law requires the City to adopt a balanced budget each year. A balanced budget is one in which budgeted funding sources equal budgeted expenditures.
The City adopted an investment policy in January 2019. The primary objectives are to conform with all applicable legal requirements, to adequately safeguard principal, to provide sufficient liquidity to meet all operating requirements, and to obtain a reasonable rate of return.
General Fund is the City’s general operating fund and is used to account for all financial transactions except those required to accounted for in another fund. Principle sources of revenue are property taxes, licenses and permits, intergovernmental revenues, and various charges for services such as refuse collection fees. A few of the primary expenditures in the General Fund are public safety (including police and fire services), general government, public works and debt service.
Special Revenue Funds are to report the proceeds of specific revenue sources that are restricted or committed to expenditures for a specific purpose other than debt service or capital projects. The Parks and Tourism, Stormwater Utility, State Accommodations, and the Fire Impact are Special Revenue funds budgeted through the City’s Budget process. The TIF II Fund will be included in the budget process, but only to the extent of capital equipment and other direct operating costs as all capital infrastructure will be incorporated through the adoption of the Capital Improvement Plan. The Incremental Tax revenue is no longer being collected as of June 30, 2017 and all associated debt of the TIF II Fund has been repaid.
The purpose of each of these Special Revenue funds is as follows:
• The Parks and Tourism Fund accounts for the local hospitality and local accommodations taxes and other revenues that support parks and tourism activities and the related costs.
• The Stormwater Utility Fund accounts for the Stormwater Utility charge to properties within the City and all associated costs used for all stormwater utility activities.
• State Accommodations Tax Fund accounts for the 2% State Accommodations sales tax from transient room rentals. The expenditures are restricted to tourist related activities as stipulated by State Law.
•The Fire Impact Fund accounts for the collection of the Fire Impact Fee and use of these funds is restricted by City Ordinance for capital improvement related Fire services.
The Capital Projects Fund accounts for activity related to capital projects of the City.
The American Rescue Plan Act (ARPA) accounts for the collection of ARPA fund and the related expenditures in accordance with Federal Treasury Department's guidance