General Budget information & Budget Organization

Budgeting has several major purposes. First and foremost, the budget must be balanced which means total revenues must equal total expenditures. Budgeting is also a formal way to convert the City's long-range plans and policies into services and programs for the citizens of the City of Charlottesville. The budget also details these services and programs in terms of costs. The City's budget informs the City Council and the public of the City government's plans for the coming fiscal year (July 1, 2023 - June 30, 2024) and provides the Council with the opportunity to review and decide the level of services to be provided to our citizens.

Budgeting also outlines the revenues (taxes, fees, and others) that are needed to support the City's services, including the rate of taxation to be adopted for the coming fiscal year. Finally, the budget adopted by City Council becomes a work plan of objectives to be accomplished over the coming year.

The basis of budgeting for the City of Charlottesville is the same as the basis of accounting used in the governmental fund financial statements. All budgets are presented on the modified accrual basis of accounting, under which revenues and related assets are recorded when measurable and available to finance operations during the year, and expenditures, other than compensated absences and interest on debt, are recorded as the related fund liabilities are incurred. Revenues considered prone to accrual consist primarily of property taxes, certain grants, and sales and utility taxes. Any property taxes that are not due as of June 30th are recorded as deferred revenues. Budgets for City and School operations, Utilities and Debt Service are adopted on an annual basis. Budgets for the Capital Projects Fund and Other Funds are continuing appropriations beyond the fiscal year. It is the intention of the City Council that appropriations for capital projects continue until completion of the project. Budgets for all funds are adopted on a basis consistent with generally accepted accounting principles (GAAP).

The City's financial management system is divided into several funds. A separate sum of money is set aside for each fund. Funds are established for special program groups which usually have specific revenue sources associated with their expenditures. The City's major funds, which are subject to appropriation by City Council, are:

1. General Fund (Operating)
2. Enterprise Funds (Utilities and Golf Funds)
3. Capital Improvement Program Fund
4. Internal Service Funds
5. Other Non-General Funds

The General Fund is usually referred to as the operating fund and is used to finance the day-to-day operations of the City. It is the largest part of the City's total financial operation. Revenues for this fund are obtained from taxes, licenses, and permits, intergovernmental revenue, charges for services, fines, interest, and City/County Revenue Sharing funds.

Enterprise Funds consist of the operating and capital budgets of the Gas, Water, Stormwater and Wastewater programs in the City. Other enterprise funds include the Golf Course, Charlottesville Area Transit, and Parking Fund. These funds account for each of their respective operations as if they were each a separate, self-supporting business.

The Capital Improvement Program Fund is used to account for all financial resources that are needed in the acquisition or construction of capital assets. Revenues for this fund are obtained from bond issues, a transfer from the General Fund, a contribution from the City Schools for their small capital projects program, and contributions from Albemarle County for shared projects.

Internal Service Funds are governmental funds that consist of the operating and minor capital budgets of the Communication systems and Fleet Management. These funds primarily provide services and support to other City departments and are used to account for the goods and services provided by one department to other departments or agencies on a cost-reimbursement basis.

Other Non-General Funds include the following:

• Equipment Replacement Fund – The City’s fleet consists of 650 vehicles and pieces of equipment, 462 of which are replaced using this fund. The other 188 are Utilities, Fire apparatus and Social Services vehicles replaced by other means.
• Facilities Repair Fund –Provides funding to preserve the City’s investment in non-school facilities.
• Retirement Fund – This is a trust (fiduciary) fund supported by contributions paid by the City, based on actuarial calculations, that provides City employees with a pension to supplement social security benefits upon retirement.
• Risk Management Fund – Provides accounting for the City's risk management program.
• Debt Service Fund – Provides necessary funds to retire the City’s general government outstanding bond indebtedness and related costs.
• Health Care Fund – The Health Care Fund is the funding source for the City's health related benefits provided to participants in the City's health care programs.

An annual operating budget is adopted for the General Fund. Within the General Fund, budgets are legally adopted at the departmental level. The City Manager is authorized to transfer the budget for personnel cost (salaries and fringe benefits), if necessary, between departments; however, any other revisions that alter the total expenditures of any department or agency must be approved by City Council with an appropriation. Unexpended appropriations lapse at the end of the fiscal year unless carried over by Council action. Budgets for City and School operations, Utilities and Debt Service are adopted on an annual basis. Budgets for the Capital Projects Fund and Other Funds are continuing appropriations beyond the fiscal year. It is the intent of the City Council that appropriations for capital projects continue until completion of the project and that funds accumulated in the Debt Service Fund be dedicated to future debt service.

The following matrix illustrates the alignment between the City’s operational departments and the City’s major operational funds.

City Code Sec. 11-1

The City Manager shall keep the Council fully advised of the City’s financial condition and shall, on or before March fifteenth in each year, prepare and submit to the Council a tentative budget for the next fiscal year. Such budget shall be in conformity with the provisions of the Charter and of this Code and the general law and shall contain estimates of the financial needs and resources of the City for such fiscal year and a program of activities which in the City Manager ‘s judgment will best meet the needs of the City and its people, considering resources available.

City Code Sec. 11-2

The council shall cause to be prepared by the City Manager an annual budget containing all proposed expenditures and estimated revenues and borrowing for the ensuing year, and at least thirty (30) days thereafter shall order a city levy as provided for by state law and sections 14, 19 and 20 of the Charter. The Council shall adopt or approve the annual budget and shall make such city levy prior to April fifteenth in each year.

Each fall, Budget Office staff presents five-year revenue and expenditure forecasts (pg. B-15) and a draft set of Budget Guidelines for the upcoming fiscal year that Council will formally adopt. This assists the City Manager’s Office and the Office of Budget and Performance Management in planning and preparing a balanced budget by establishing broad goals that guide decision making for the upcoming and future fiscal years.

• Annually review major local tax rates.
• Develop operational budgets within projected available revenues.
• Focus on Council's Strategic Vision Areas and Strategic Plan Goals
• Continue to incorporate the use of performance measures to assist in making decisions that support budget priorities related to the City’s Strategic Plan, the goal being to use measures as a management and decision-making tool during the budget process. (See Below)
• Continue the strong commitment to education by allocating up to 40% of new City real estate and property tax revenue to schools.
• Invest strategically in employees by providing adequate pay, benefits, training, technology resources, support, and appreciation.
• Annually review the amount of the living wage being paid by the City to its employees and continue to require the payment of a living wage under City contracts subject to City Code sec. 22-9.
• Fund no new programs or major expansion of existing programs without fully offsetting revenues or reductions in expenditures.
• Balance reinvestment in the City’s existing infrastructure and facilities and creation of new opportunities for investing in the future of the City.
• Conduct the Vibrant Community Fund process to evaluate agency requests for program congruence with Council’s strategic areas.
• Transfer at least 3% of general fund expenditures to the Capital Improvement Fund (CIP).
• Budget a reserve for Council Strategic Initiatives.
• Budget a Fund Balance Target Adjustment pool of funds to help ensure that the City continues to meet the important financial policy of maintaining an unappropriated fund balance in the General Fund.