Budget Overview

The Fiscal Year 2023 covers January 1, 2023 through December 31, 2023. Below is a summary of the City-wide budget.

The budget is the City’s plan for how revenue will be spent on services that support our community.

A balanced budget ensures our "revenues" (the amount of money the City brings in) are equal to or greater than our "expenditures" (the amount of money the City spends). Durango approves a budget every fiscal year. The budget runs from January 1, 2023 through December 31, 2023.

What is the City's budget process?

From May to December, every year, City staff and City Council work together to create a balanced budget by December 15, as required by law.

How is the City's budget funded?

The City of Durango's budget is funded through local taxes, service fees, grants and other sources. When you pay taxes, such as sales or property tax, a percentage comes to the City to fund local programs and services. Many government agencies provide support to the Durango community.

Together, we provide essential services and support to our community – from maintaining roads, sewers and parks, to providing transit and clean water.

Proposed Capital Improvement Program (CIP)

In addition to the Proposed Operating Budget, the City also issues a Proposed Capital Improvement Program (CIP) for City Council consideration. The Policy Budget is the City’s operating budget and includes the projected revenues and expenditures required to provide most City services. For instance, the operating budget includes revenues from general taxes which provide funding for police services, fire and emergency medical services, youth and recreation programs, library services, city administration and other City needs.

The CIP, by contrast, presents planned expenditures for projects which will improve the City’s infrastructure, buildings and environment as well as major purchases such as land, buildings and equipment.

City of Durango Budget Guidance

The City of Durango adheres to the provisions set forth in the City Charter that was first adopted in 1912 with regards to its annual budget. The financial procedures set forth in the Charter with regards to the budget are listed below.

• The fiscal year of the City of Durango and all its agencies shall be determined by the City Council by ordinance.

• The City Manager shall direct the preparation of the Annual Budget and submit the Annual Budget to the City Council in a timely manner.

• The Budget for the ensuing year shall contain:
  1. A detailing of the anticipated revenues from all sources, including any surplus funds from the preceding year;
  2. A statement of the Adopted expenditures for each office, agency, or department. Such statement shall further include a statement of the expenditures for personnel, operations, other expenses and capital outlay;
  3. Subsidiary budgets shall be prepared for all city-owned utilities in conformance with Municipal Accounting Standards;
  4. An estimate of the amount of surplus funds which shall exist at the end of the budget year.
  5. A comparison, in detail with the previous budget year;
  6. The City Manager shall supply, when directed by the Council, any other supporting information that the Council may request concerning the budget.

• Long Term Financing: The budget shall also include:
  1. A statement of all Adopted capital construction projects irrespective of whether such projects are to be completed during the budget year. Such statements shall also contain an estimate of their costs and necessary revenue measures to accomplish the completion of the projects and a statement of the estimated annual costs of operating such projects;
  2. A statement of bonded indebtedness, or other long-term obligations along with the retirement schedule, interest requirements, and sinking funds provided for such obligation.

• Budget Hearing: A public hearing on the budget shall be held before its final adoption. Notice of such public hearing shall be announced at least two weeks prior to such hearing. Publication shall be made as otherwise provided in the Charter. The complete budget shall be on file for public inspection in the city offices, for a period not less than two week prior to the date of such hearing, and available for purchase by the public, at actual cost.

• Adoption of Budget and Appropriation Ordinance: The City Council shall adopt the final budget in a timely manner prior to the start of the ensuing budget year, and pass the necessary Appropriation Ordinance.

• Certification of Tax Levy: The City Council shall certify to the authorized taxing authority the proper number of mills on each dollar of assessed valuation of all taxable property within the corporate limits of the City, as may be necessary to raise the ad valorem requirements of the adopted budget. Such certification shall be done by the City Council in a timely manner, or as required by the taxing authority.

• Failure to Adopt Budget, Appropriation Ordinance and Tax Levy Certification: If the City Council fails to act in a timely manner to adopt the annual budget, the Appropriation Ordinance, or to certify the tax levy, as required by the Charter, the amounts last fixed shall be the amounts for the ensuing year. These amounts will be in effect until the City Council takes additional action.

• Transfer of Appropriations: The Council may make additional appropriations by resolution during the budget year for unanticipated expenditures required by the City, but not in excess of the amount that actual reserves exceed budgeted revenues and un-appropriated surplus, unless the appropriation is necessary to relieve an emergency endangering the public health, peace, and safety. Should such an emergency exist, the Council must, by appropriate resolution, find an additional appropriation necessary to relieve an emergency endangering the public health, peace, and safety of its citizens.

• Sinking funds and Special Reserve Funds: The City Council may, by ordinance provide for sinking or reserve funds for all forms of debt service, future improvements, or other projects. Such funds are to be held in trust for each specified purpose.

• Accounting Records: The City Manager shall direct and administer a proper system of accounts and records which shall conform with current generally accepted governmental accounting principles. The system of accounts and records shall provide the following:
  1. An efficient day-to-day operation in the handling of receipts and disbursements for the City’s funds;
  2. A monthly statement of receipts and expenditures in such manner that the City Council has enough details to determine the compliance with budget requirements, and to determine the financial condition of the City. This statement shall be made available for public inspection:
  3. A comprehensive annual financial report covering all funds and financial operations of the City.

• Internal Control: The accounting system shall incorporate a proper system of internal control and provide for the minimum safeguards in accounting controls.

• Annual Audit: An independent audit shall be made annually of all City accounting records by a certified public accountant, licensed to practice in the State of Colorado. The accountant shall not be an employee of the City of Durango. The City Council shall select the accountant and may call for more frequent or special audits if deemed necessary. Such audits shall be available for public inspection, and for ensuing budget preparation.

• Purchasing: The City Manager shall direct a central purchasing operation which shall be responsible for the procurement of goods and services for all departments, offices, and agencies. The procedures utilized by the purchasing department shall comply with standards normally used in municipal and governmental entities, provided, however, that nothing contained herein shall be construed as limiting the power of the City of Durango from entering into a joint purchasing agreement with any governmental entity.

• Depository: The City Council shall designate depositories for City funds and provide security for such deposits.

• Investments: Cash in any City fund not needed for current operations may be invested in any manner that is then permitted by the statues of Colorado. Such investments shall take into account the time when the cash will be needed for its intended purpose.

• Forms of Borrowing: The City may borrow money and issue securities in evidence thereof, as follows:
  1. Short-term notes
  2. Anticipation warrants
  3. General obligation bonds
  4. Revenue Bonds
  5. Local improvement bonds; and
  6. Any other like securities.

• Short-Term Notes: The City may, by resolution of the City Council, without an election, issue short term notes maturing within twelve months of the date of issuance. Such notes are not indebtedness.

• Obligations Payable from General Revenues: No bonds or other evidence of indebtedness payable in whole or in part from general revenues, or to which the full faith and credit of the City are pledged, shall be issued until the question of their issuance shall be submitted to a vote of the registered electors at a special or general municipal election and approved by a majority of those voting. For purposes of this section, “general revenues” shall be defined to include but not be limited to: ad valorem taxes, sales and use taxes, and charges of any nature to users or future users of the water or sewer systems. Other sources of revenue shall be considered “general revenues” if said revenues are not specifically discussed in other sections of this article. This section is not to be construed to require an election prior to issuing specific bonds if the Constitution of the State of Colorado has not delegated the power to home rule cities to decide whether or not such an election should be required.

• Limitation of Indebtedness: The aggregate amount of bonds or other forms of indebtedness payable in whole or in part from the proceeds of ad valorem taxes, or to which the full faith and credit of the City are pledged (excluding such debt relating to water and excluding securities issued under Section 23) shall not exceed ten percent of the assessed valuation of the taxable property within the City, as shown in the most recent assessment for City purposes.

• Revenue Securities: The City may, by ordinance of the City Council, without election and without adherence to the limitations of Section 21, issue securities made payable solely from revenues derived from the operation of the project or capital improvement acquired or bettered with the securities’ proceeds.

• Local Improvements Bonds: The City may, by ordinance of the City Council, contract for or construct local or special improvements within specified districts of the City, and determine the methods of specially assessing the cost of such improvements, unless the owners of a majority of the property of such district oppose the project, or alternatively, if Council so provides by procedural ordinances, a majority of the owners of property in an assessments unit oppose the project to be constructed in such unit.

• Refunding Securities: The City may, by ordinance, issue securities for the purpose of refunding outstanding securities as the same mature or in advance of maturity (but without impairing them outstanding contractual rights) by means of escrow or otherwise; and it shall be the duty of Council to authorize such refunding securities whenever it determines it to the best advantage of the City to do so.

• Long-Term Lease Agreement: The City Council may, by ordinance, enter into long term rental or leasehold agreements and may provide for payment thereof by general appropriation levy, by imposition of usage fees on such rental or leasehold property, or a combination of both general appropriation levy and imposition of usage fees. The obligation to pay such rental or leasehold costs shall not be construed to be a part of the Charter’s limitation on indebtedness.

Basis of Presentation, Budgeting, & Accounting

Basis of Presentation – Fund Accounting

The activities of the City are organized into separate funds that are designated for a specific purpose or set of purposes. The City uses these funds to maintain its financial records during the year. Each fund is considered a separate accounting entity, so the operations of each fund are accounted for with a set of self-balancing accounts that comprise its revenues, expenses, assets, liabilities, and fund equity as appropriate.

The number and variety of funds used by the City promotes accountability but can also make municipal budgeting and finance complex. Therefore, understanding the fund structure is an important part of understanding the City’s finances. The two basic fund categories are Governmental Funds and Proprietary Funds; within each category there are various fund types. Following is a description of the seven fund types that contain the City’s various funds.

Governmental Funds

Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purpose for which they may or must be used. Fund liabilities are assigned to the fund from which they will be liquidated. The City reports the difference between governmental fund assets and liabilities as fund balance.

General Fund

The General Fund is the City’s primary operating fund and is used to track revenues and expenditures associated with the basic City services that are not required to be accounted for in other funds. This includes services such as police, public works, parks and recreation, and other support services such as finance. These services are funded by general purpose tax revenues and other revenues that are unrestricted. This means that the City Council, with input from the public, has the ability to distribute the funds in a way that best meets the needs of the community as opposed to other funds that are restricted to predefined uses.

Special Revenue Funds

Special Revenue funds account for activities supported by revenues that are received or set aside for a specific purpose that are legally restricted. The City has seven Special Revenue funds; Conservation Trust Fund, 2015 Sales Tax Fund, Road Impact Fee Fund, Durango Tourism Fund, Storm Drainage Fund, Park Development Fund and Revolving Loan Fund.

Debt Service Funds

Debt Service funds account for the funds used to pay debt service. The City has two Debt Service funds; 1999 Sales Tax Bonds Debt Service Fund and 2007 & 2009 Sales Tax Bonds Debt Service Fund.

Capital Projects Funds

Capital Projects funds account for financial resources that are primarily used for the acquisition, improvements, or construction of major capital projects. The City has four Capital Projects funds; Airport Construction Fund, Capital Projects Fund, Capital Improvements Fund and Open Space, Parks and Trail Fund. The 5-year capital improvements plan lists approved and anticipated capital projects of the City, and can be located in the capital improvement plan section of the budget document.

Proprietary Funds

Proprietary fund reporting focuses on the determination of operating income, changes in net assets, financial position and cash flows. The proprietary funds are classified as enterprise funds and internal service funds.

Enterprise Funds

Enterprise funds account for operations that are financed and operated in a manner similar to private business, where the intent of the City is that the fund will be self-supporting. This requires that the expense of providing goods and services to the general public on a continuing basis be financed and recovered primarily through user charges. In the event that these user charges are insufficient to cover the operations of the Enterprise fund, transfers can be made from other fund types to provide additional support. The City’s Enterprise funds consist of Utility Funds (Water, Waste Water and Sustainable Services), Airport Fund, and Transportation Services Fund.

Internal Service Funds

Internal Service funds account for the financing of goods and services provided primarily by one City department to other City departments or agencies, or to other governments, on a cost-reimbursement basis. The City’s Internal Service funds consist of the Capital Equipment Replacement Fund (CERF), General Services Fund, Self-Insurance Fund, and Risk Manager Fund.

Basis of Budgeting

Basis of budgeting refers to the methodology used to include revenues and expenditures in the budget. The City of Durango primarily budgets on a cash basis. The revenues and expenditures assumed to be collected or spent during the period appropriated. Using this assumption, the current year revenues are compared to expenditures to ensure that each fund has sufficient revenues to cover expenditures during the budget year, or that there are sufficient cash reserves in the fund to cover the revenue shortfall.

Basis of Accounting

Basis of accounting refers to the point at which revenues or expenditures are recognized in the accounts and reported in the financial statements. The government-wide financial statements, as well as the financial statements for proprietary funds and fiduciary funds, are reported using the economic resource measurement focus and the accrual basis of accounting. Under accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of when the cash is received.

Governmental fund financial statements are reported using current financial resources measurement focus and the modified accrual basis of accounting. Under modified accrual basis of accounting, revenues are recognized as soon as they become both measurable and available, and expenditures are recorded in the periods that the expenditure occurs and becomes a liability.

Basis of Budgeting vs. Basis of Accounting

The basis of budgeting differs from the basis of accounting only by the assumptions that are made in regard to the timing of the recognition of revenues and expenditures. The budget assumes that all revenues and expenditures, as well as, the associated cash, will be expended or received during the budget period. Conversely, the basis of accounting only recognizes revenues when they become both measurable and available, and expenditures incurred. Cash is not necessarily received or expended at the same time.

Budgetary Information

The governmental fund budgets are adopted on a basis consistent with GAAP. Adopted budgets for enterprise and internal service funds are presented on a non-GAAP basis. The nature and amount of the adjustments necessary to convert the actual GAAP data to the budgetary basis is as follows:

Formal budgetary integration is employed as a management control device during the year for the general fund, all special revenue funds, (with the exception of the revolving loan fund), the capital projects fund and all proprietary fund types (with the exception of the self-insurance fund). Budgetary control for funds not formally budgeted is alternatively achieved through financial management plans or as the result of established ordinances.

The legal level of control (the level at which expenditures may not legally exceed appropriations) for each adopted annual operating budget generally is the department level within each individual fund. Any change in total to a fund or departmental appropriation within a fund requires City Council approval.

The City Council must adopt a balanced budget. The definition of a balanced budget is a budget that is not in excess of the amount that actual revenues exceed budgeted revenues and un-appropriated surplus for that fund.

All unexpended annual operating appropriations lapse at year-end.

Annual Budget Procedure

The budget procedure begins with the budget department distributing budget instructions to the Department Directors. The budget packets include instructions for the upcoming budget, personnel schedules, previous 3 years actual expenditures, and current year’s operating expenditures for 6 months. The Department Directors, with guidance from budget staff, prepare and submit their operating and capital requests. Outside agencies are required to submit information including program descriptions, accomplishments, goals, adopted use of funds, approximate number of citizens served, and how these programs may positively affect other City expenditures.

In October, the Proposed budget for the fiscal year commencing the following January 1st is submitted by the City Manager to the City Council. The Proposed budget must be balanced: the means of financing expenditures must be equal to or greater than expenditures. Surplus fund and fund balance are considered a financing source.

During October and November, the Council holds budget meetings with Elected Officials, Department Directors, and other staff managers to discuss budget recommendations and performance measures. A public hearing is held to allow for input from the citizens. Prior to December 15, budget staff finalizes a balanced budget pursuant to Council direction. The budget is adopted, funding is appropriated, and the mill levies are certified.

The appropriated budget is prepared by fund, cost center and department. Spending authorities may make transfers within a cost center with Finance and City Manager approval. Transfers or appropriations between spending agencies within a fund and between funds are made at the Council level. The legal level of budgetary control is at the fund level.

Budget staff prepares the published budget document. The budget document comprehensively covers the financial plan for the year and serves as an operations guide and communications tool. The budget document provides fiscal information for the prior and current year, as well as a description of each cost centers mission and performance/output measures. It contains summaries and detailed fund budgets including a schedule of the approved staffing levels and the capital expenditure plan. The five-year capital expenditure budget and plan is presented with the amounts for the 2022 budget legally appropriated funds. The years 2023-2026 are presented as a plan and represent no legal spending authority of any City office or department.

Budget supplements which will increase a fund’s adopted budget, such as to expend unanticipated revenues or to transfer appropriated monies to another fund, requires Council approval at a duly noticed public meeting.

Budget Terms and Concepts

Basis of Budgeting

The operating budget shall be prepared on a modified accrual basis whereby revenue is recognized when it becomes available and measurable, and expenditures are recognized when the liability is incurred. Purchases of materials, supplies, and equipment are considered expended when bought and depreciation expense for budgetary purposes is excluded. Encumbrances are considered obligations when the commitment is incurred.

Cost Allocation

The operating budget shall be prepared in a manner that reflects the full cost of providing services. A cost allocation plan shall be prepared every three years.

Level of Control

The level of control, which is the level at which spending cannot exceed the budgeted amount without formal City Council authorization, shall be at the Fund and Department level.

Balanced Budget

The operating budget for all operating funds will be structurally balanced. Recurring revenues will equal or exceed recurring expenditures in both the proposed and adopted budgets.

Budget Form and Information

The operating budget document shall include information on and align with the City of Durango Strategic Plan. The format of the document shall include estimated beginning fund balance, estimated revenues, estimated expenditures, and estimated ending fund balances; and include prior year actuals revenue/expenditures and estimated current year actuals.

Long-Term Financial Forecasts

The operating budget shall include forecasts of major revenues and expenditures, extending ten years into the future. The forecasts, and underlying assumptions, shall be clearly stated. The forecasts shall be regularly monitored and updated annually.

Performance Measurement

The operating budget shall integrate performance measures into the operating budget development and budget document. Performance measures include both outcome and workload measures as well as efficiency and effectiveness measures. Effectiveness measures may include citizen surveys. The City will monitor progress by establishing measurable objectives and outcomes that correlate to the priorities in the strategic plan.

The Budget Process

Budget Preparation Calendar