Budget Resources

~ Glossary (Alphabetical)

Account - Term used to identify an individual expenditure, revenue, or fund balance.

Account Number - A specific expenditure or revenue classification designating the Fund, Purpose, and Department of the activity.

Accrual - A financial accounting method that allows the recording of revenue before receiving payment or the recording of expenses as incurred but before payment.

Ad-valorem Taxes - Real estate and personal property taxes. Property taxes are levied per $100 of taxable value.

AICPA - American Institute of Certified Public Accountants

Appropriation - An authorization granted by the legislative body to make expenditures or to incur obligations for a specific purpose. An appropriation is limited in amount and the time it may be expended.

Assessed Valuation - A valuation set upon real property or other property by a government as a basis for levying taxes. Assessed value of property is determined by Harris County Appraisal District.

Asset - Property owned by the City government that has monetary value.

Audit - A systematic examination of all the governmental resources concluding in a written report and prepared by a certified public accountant. It is intended to test whether financial statements fairly present financial position and result of operations.

Balanced Budget - The status of a budget whereby expected resources, including the use of accumulated reserves, are equal to the anticipated expenditures.

Bonded Debt - That portion of the indebtedness represented by outstanding bonds.

Bonds Issued - Bonds sold.

Budget (Operating) - A plan of financial operation containing an estimate of the proposed expenditures for a given period and the proposed means of funding them. The term is usually used in reference to an annual expenditure plan.

Budget Calendar - A schedule of key dates which the City Council and staff follow in preparation and adoption of the annual budget and tax rate.

Budget Message - A general discussion of the proposed budget, as presented in writing by the City Manager, addressed towards the Mayor, City Council, and citizens.

Budget Ordinance - The official enactment by the City Council establishing the legal authority for the officials to obligate and expend resources.

Capital Assets - Assets of significant value ($5,000) having a useful life of several years (also called Fixed Assets).

Capital Improvement Plan - A plan for capital expenditures to be incurred each year over a fixed period of several years setting forth each capital project, identifying the expected beginning and ending date for each project, the amount, and the method of financing.

Capital Outlay - Expenditure which results in the acquisition or addition of fixed assets.

Capital Projects Fund - Fund established to account for all resources, bond proceeds, and construction grants which are used for the acquisition of capital facilities and infrastructure.

Central Appraisal District (CAD) - CAD is responsible for establishing a consistent property valuation system used by all taxing jurisdictions to levy taxes. Harris County Appraisal District does this for the City.

Compensated Absence - Recorded non-worked benefit hours that will be paid (e.g., vacation, sick, holidays, and compensatory time earned).

Component Unit - Entities for which the elected officials of a government are financially accountable and organizations whose exclusion would cause a government's financial statements to be misleading.

Contingency - A budgetary reserve allocated for emergencies or unforeseen expenditures.

COVID-19 - A highly contagious respiratory disease caused by the SARS-CoV-2 virus. The spread of this respiratory virus reached pandemic status and disrupted activities in all sectors beginning March 2020.

Customer Deposits - Deposits made by customers as a prerequisite to receiving utility service; these deposits are recorded as a liability.

Debt - An obligation resulting from borrowing money or from purchasing goods or services on credit.

Debt Limit - The maximum amount of gross or net debt legally permitted.

Debt Service - The cost of paying principal and interest on borrowed money according to a predetermined payment schedule.

Debt Service Fund - A fund established to finance and account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Also called a Sinking Fund or an Interest & Sinking Fund.

Deficit - When a government's expenditures exceed revenue during a fiscal period.

Department - An accounting designation to separate out the costs and activities of a particular service or function.

EDC - Acronym for Economic Development Corporation, the City's Section 4B entity. This entity receives its funding from 0.5% of the taxable sales in the City. Its mission is to promote and encourage economic growth and activity.

Encumbrances - Obligations in the form of purchase orders, contracts, or salary commitments that are chargeable to an appropriation and for which a part of the appropriation is reserved.

Enterprise Fund - Also known as a Proprietary Fund, it is established to finance and account for an operation that is financed and operated in a manner similar to private business enterprises - whereby the intent is that the costs (expenses, including depreciation) of providing goods or services to external customers on a continuing basis be financed or recovered primarily through user charges. Examples of enterprise funds are those for water and wastewater services.

Expenditures - If the accounts are kept on the accrual basis, this term designates total charges incurred, whether paid or unpaid, including expense, provision for retirement of debt not reported as a liability of the fund from which retired, and capital outlays.

Expenses - Charges incurred, whether paid or unpaid, for operation, maintenance, and interest, and other charges that are presumed to benefit the current fiscal period.

Financial Adviser - A consultant who provides advice on any of a variety of issues related to financial matters, particularly with the issuance of debt. The financial advisor for the City is Hilltop Securities.

Fiscal Policy - This is the City's policy with respect to revenues, spending, and debt management. These govern the ability of the city to provide services, programs, and capital investment. Fiscal policy provides an agreed-upon set of principles for the planning and programming of the annual budget.

Fiscal Year (FY) - A designated 12-month accounting period. This fiscal year for the City begins on October 1 and ends on September 30 of the following year.

Franchise Fee - A charge by the City for a special privilege granted by the City permitting the continued use of public right-of-way, usually involving elements of monopoly and regulations (e.g., Comcast, CenterPoint).

Full Faith and Credit - A pledge of the general taxing power of a government to repay debt obligations (typically used in reference to bonds).

Full-Time Equivalent - A measure of authorized personnel calculated by dividing total organization-wide hours of work per year by the number of hours worked per year by a full-time employee.

Fund - A fiscal and reporting unit of the city responsible for its own financial resources. A fund is established to carry on certain specific activities or obtain specified objectives in accordance with legal direction (e.g., Water & Sewer, Tourism Fund). Funds are broken down into Departments, which are determined by function of that department (e.g., Police, Fire, Parks).

Fund Balance - Money available for contingency situations or in the event of an emergency. Called Retained Earnings in the proprietary funds. Fund balances may be reserved for specific future use or may be undesignated. The source of this money is typically a result of Prior Year Balance plus Revenue exceeding Expenditures resulting in a cash surplus.

Fund Balance (Non-Spendable) - The portion of the fund balance that is not available for spending, either now or in the future, because of the form of the asset (e.g., inventories, pre-paid expenses, capital assets) or a permanent legal restriction (e.g., principal portion of an endowment).

Fund Balance (Spendable) - The portion of the fund balance that is available for spending. Spendable fund balance is divided into four categories: Restricted Fund Balance - amounts constrained to specific purposes by their providers through constitutional provisions or by enabling legislation. Examples of providers are grantors, bondholders, and higher levels of government. Committed Fund Balance - includes amounts that can be used only for the specific purpose determined by formal action of the government's highest level of decision-making authority. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. Assigned Fund Balance - amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. Unassigned Fund Balance - amounts that are available for any purpose; these amounts are reported only in the General Fund.

Generally Accepted Accounting Principles (GAAP) - Uniform minimum standards and guidelines for financial accounting and reporting. They govern the form and content of the financial statements of an entity. GAAP encompass the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. They include not only broad guidelines of general application, but also detailed practices and procedures. GAAP provide a standard by which to measure financial presentations. The primary authoritative body on the application of GAAP for state and local governments is the Governmental Accounting Standards Board (GASB).

GASB - Governmental Accounting Standards Board; independent, private- sector organization that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles (GAAP).

General Fund - The fund that is available for any legally authorized purpose and which is therefore used to account for all revenues and all activities except those required to be accounted for in another fund. The General Fund is used to account for the ordinary operations of the City.

Governmental Fund - The broadest category of fund type, which includes those funds that are used to account for tax-supported (governmental) activities.

Grant - A contribution by one government unit or entity to another. The contribution is usually made to aid in the support of a specified function.

HOA - Homeowners' Association; An organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and residents.

Internal Control - A plan of organization for purchasing, accounting, or other financial activities which, among other things, provides that: the duties of employees are subdivided so that no single employee handles a financial action from beginning to end; proper authorizations from specific responsible officials are obtained before key steps in the processing of transactions are completed; and records and procedures are arranged appropriately to facilitate effective control.

Investments - Securities held for the purpose of income generation in the form of interest or dividends.

Levy (noun) - The total amount of taxes imposed by the City; usually refers to property taxes.

Levy (verb) - To impose taxes.

Maturity - The date on which the principal or stated values of investments or debt obligations mature and may be reclaimed.

Modified Accrual Basis of Accounting - An accounting theory whereby a) revenues are recognized in the accounting period in which they become available and measurable and b) expenditures are recognized in the accounting period in which the liability is incurred, if measurable. This differs from the Full Accrual Basis, which recognizes the financial effect of the transactions when they occur, regardless of the timing of the related cash flows. Both differ from Cash Basis Accounting, which recognizes transactions when the related cash amounts are received and disbursed.

NAMD - NASA Area Management District was incorporated by the state legislature to promote commercial sustainability in the community. The District receives its funding from 0.25% of taxable sales in its geographic jurisdiction.

NASA - The National Aeronautics and Space Administration is America’s civil space program and the global leader in space exploration. The agency has a diverse workforce of just under 18,000 civil servants, and works with many more U.S. contractors, academia, and international and commercial partners to explore, discover, and expand knowledge for the benefit of humanity. NASA's Johnson Space Center and museum partner, Space Center Houston, are located geographically adjacent to the northern boundary of Nassau Bay.

NBRDA - Nassau Bay Redevelopment Authority is a Local Government Corporation created with the powers granted to cities in Chapter 431, Subchapter D of the Texas Transportation Code. The Authority is the implementation component for the TIRZ #1 and the City.

Part-Time Employee - A part-time employee is one who is scheduled a determined number of hours less than 40 hours per week. Part-time employees may be granted specific benefits such as prorated amount of sick leave, vacation leave, and holiday hours. Part-time employees participate in the City's retirement plan if they are required to work at least 1,000 hours per year.

Proprietary Fund - Used in governmental accounting to account for activities that involve business-like interactions, either within the government or outside of it. These activities are similar to what would be found in the private sector, so the reporting resembles what would be used by a private business.

Purchase Order (PO) - A document issued to a vendor to deliver specific merchandise or render a specified service for a stated price. Outstanding purchase orders are encumbrances.

Reserve - An account used to indicate that a portion of fund equity is legally restricted for a specific purpose or not available for appropriation and spending. Two designations are used throughout the budget: Other Resources - Prior Year (PY) Balance refers to the balance at the end of the prior fiscal year that is being incorporated into the current fiscal year. Other Resources - End of Year (EOY) Balance refers to the restricted portion of the fund equity that is budgeted to be unspent during the current fiscal year.

Retained Earnings - An ownership account reflecting the accumulated earnings of a proprietary-type fund.

Revenue - The yield of taxes and other sources of income that the city collects and receives into the treasury for public purposes.

Revenue Bond - A type of bond that is only backed by revenue generated by a specific project or operation.

Sinking Fund - See Debt Service Fund

Special Revenue Funds - A fund used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or for major capital projects) that are legally restricted to expenditures for specified purposes. Examples are the Tourism Fund (Hotel Occupancy Tax), Special Revenue and Grants Fund, and the Street Sales Tax Fund.

Tax Collection - Property taxes for the City of Nassau Bay are consolidated with and collected by contract with the Harris County Tax Assessor-Collector.

Tax Levy - The total amount to be raised by general property taxes for purposes specified in the tax levy ordinance.

Tax Rate (Adopted) - The amount of tax levied for each $100 of assessed valuation.

TWDB - Texas Water Development Board is a state agency that helps regulate and fund various water and wastewater activities throughout the state. The City received bond revenue through the TWDB to finance substantial utility improvements in the City.

TIRZ #1 - Tax Increment Reinvestment Zone #1 was established under the Texas Tax Code Chapter 311 to pay for costs of public infrastructure within the designated geographic zone. The zone began in 2007 and receives 90% of the property tax that is levied on the value increase (increment) since its inception.

Transfer - All inter-fund transactions that are not loans, reimbursements, or quasi-external transactions are classified as transfers. The typical operating transfers reflect ongoing operating subsidies between funds.