Financial Policies

1. Fiscal planning refers to the process of identifying resources and allocating those resources among competing purposes. The primary vehicle for this planning is the preparation, monitoring, and analysis of the City’s budget. It is increasingly important to monitor the performance of the programs competing to receive funding.

2. The City Manager will develop the annual budget based upon the City Fiscal Policy, as amended from time to time. The City Manager shall submit to the City Commission a proposed annual budget prior to July 1. The City Commission shall adopt the annual budget prior to October 1.

1. Non-recurring funding sources or “one-time” monies are available for use only once and are not expected to reoccur year after year. One-time monies include fund balance from previous years, unexpected revenues, one-time revenues, or savings from unexpectedly lower expenses in any year. Because these monies are not regular revenues that recur from year to year, good financial practices avoid uses that have ongoing costs because spending could increase to a level that would not be supported by future years’ revenues.
2. Non-recurring monies should not be relied on for ongoing operating purposes.
3. Generally, one-time monies should be used for additions to reserves, for capital purchases, or for one-time expenditures.
4. One-time monies could, under appropriate circumstances, include short-term funding for operating costs. Examples of short-term funding may include the start-up or bridging of an operating program over a short-time period until permanent funding is available, or to shut-down a program over time.

1. The purpose of the Capital Improvement Program is to systematically plan, schedule, and finance capital projects to ensure cost-effectiveness as well as conformance to established policies.
2. A capital project is an equipment acquisition, a computer/software systems acquisition, or a public improvement that involves construction of new infrastructure, additions to existing structures, renovation of existing structures, and major repairs to infrastructure of a comprehensive and non-routine nature. A capital project is defined in financial terms as a project with a projected final cost of at least $50,000 and is a non-recurring expense. In addition, the capital asset(s) resulting from the project should have a useful life of at least 5 years.
3. The City will develop, maintain and revise when necessary a continuing Capital Improvement Program (CIP).
4. The CIP will cover a five-year planning horizon, identifying infrastructure and facility projects along with the funding sources available for projected expenditures. Capital improvement projects will not be authorized or awarded until the funding sources have been identified to finance the project.
5. The City Commission shall approve the annual CIP that addresses all capital investments planned for the budget year and for the subsequent four budget years at the time of adoption.
6. The CIP will monitor projects in progress to insure their timely completion or the substitution of alternative projects.
7. For major capital projects, the unencumbered and encumbered balances will be considered for reappropriation in the subsequent fiscal year.
8. Studies directly identified with a specific capital project will be included in the CIP. Feasibility studies will be budgeted as an operating expense.

1. An important component of good fiscal practice for any organization is to have a policy on the amount of reserves to be maintained, the purposes for which their use is allowed, and the way reserves are restored after use. Fund balance is an important indicator of the City’s financial position.
2. Fund Balance is comprised of Non-spendable, Restricted, Committed, Assigned, or Unassigned components. This policy refers to unrestricted fund balance which would include the latter three fund balance components: Committed, Assigned, or Unassigned.
3. The City’s General Fund unrestricted fund balances will be maintained to provide the City with enough working capital and a comfortable margin of safety to address emergencies and unexpected declines in revenue without borrowing. This is needed to maintain the City’s creditworthiness and to adequately provide for economic and legislative uncertainties, cash flow needs and contingencies.
4. It is the policy of the City that the unassigned fund balance be maintained at a minimum level adequate to fund personal and operating expenditures for not less than three months of the subsequent fiscal year. In the event the unassigned fund balance is used to cover unanticipated costs, the reserve will be replenished as part of the annual budgeting process in an amount to restore the reserve up to the three-month level. The replenishment should be amortized over a period not to exceed five years.
5. The City will maintain an assigned reserve for the self-funded health insurance plan at a minimum of 25% of the prior year claims total. In the event the assigned reserve is used to cover higher than anticipated claims costs, the reserve will be replenished as part of the annual budgeting process in an amount to restore the reserve funding to the required level. The replenishment could be amortized over a period not to exceed three years.
6. Available funds in excess of the minimum required to fund the unassigned fund balance may be assigned to fund other priorities established by the City Manager and City Commission. The City Manager and Financial Services Director will approve any assigned fund balances as deemed appropriate for potential future needs.

1. It is the policy of the City that enough cash reserves be available to fund personal and operating expenditures for not less than three months of the subsequent fiscal year.
2. Available funds in excess of the minimum required to fund the reserve will be used to fund the renewal and replacement reserves, capital expenses, and any required debt service reserves. The remainder shall be considered surplus and may be carried forward year to year and used to fund future capital acquisitions.

1. Management must ensure compliance with the legally adopted budget. Additionally, purchases and expenditures must comply with legal requirements.
2. Expenditures will be controlled by an annual budget at the fund level.
3. Departments may not exceed the total departmental appropriation, as adopted in the annual budget.
4. Department Heads may transfer funds within their department budget with the approval of the City Manager but will generally avoid using funds for capital items that were budgeted but not purchased, as well as using unexpended funds from personal services. The City Manager will administratively re-align the budget at year-end to properly classify charges to the proper account codes.
5. The City Manager may approve transfers between departments within the fund.
6. The City Manager may transfer these appropriations between funds as necessary through the budget amendment process.
7. Department directors are required to control expenditures to prevent exceeding their total departmental expenditure budget. It is the responsibility of these department heads to immediately notify the Financial Services Director and the City Manager of any exceptional circumstances that could cause a departmental expenditure budget to be exceeded.
8. If a deficit is projected during any fiscal year, the City will take steps to reduce expenditures, increase revenues or use fund balance in accordance with the Fund Balance Policy.

1. All government employees are considered stewards of public funds. In order to provide funding for service delivery, the City must have reliable revenue sources. These diverse revenues must be collected equitably, efficiently, and in a timely manner.
2. The City's goal is a revenue base balanced between taxes, intergovernmental shared revenues, and other revenue sources such as licenses and permits, user fees, and other miscellaneous revenues.
3. Revenue Estimates: Projections of revenues will be made "conservatively" and with the intent of avoiding any significant shortfalls. Revenue estimates will be the responsibility of the Financial Services Director, although estimates made by the departments administering the account will be given the highest consideration. The Financial Services Director shall also monitor legislative actions to keep informed of changes that may impact available revenues.
4. Revenue Diversification: It is the City’s policy to maximize use of all available revenue sources, while maintaining source diversification to the extent possible to avoid over-dependence on one source. This will require an equitable mix of taxes, fees, charges, fines, investment income, sale or lease of City-owned property, intergovernmental revenues and grants. The City's policy is to monitor increases in revenue from existing sources and to research new funding sources to maintain diversity.
5. Non-Recurring Revenues: Non-recurring revenues will first be applied to reserves or one-time expenditures. Recurring revenues will normally fund recurring expenditures, but surpluses of recurring revenues may be used to fund reserves or non-recurring expenditures.
6. The City recognizes the "Roll Back Rate" as a concept that fails to take into consideration how services can be provided at the same level without upward adjustment for change in the cost of doing business. It is not the tax rate alone, but the combination of tax rate and property value assessments that together determine a citizen’s property tax bill. The City's policy is to consider the overall effect on individual property tax liability in both expenditure decisions and tax rate setting. Assuming the City is permitted by law, the millage will be levied with the goal of avoiding extreme fluctuations and adjustments in the future and will be targeted to provide services needed, and desired by citizens, along with the overall ability to pay for such services, rather than merely reflect tax rates of adjacent local jurisdictions.
7. User Fees: Reasonable user fees for non-essential services will be adopted to offset the corresponding costs of providing the particular services, to the extent they are competitive and comparable to similar charges by other entities in the area, and truly reflect the cost of providing the service(s). Whenever it is legal and practical, residents and businesses located within the City limits will be charged a lower fee versus non-residents. The self-supporting Enterprise funds will maintain rates enough to comply with bond covenants, cover operating and maintenance costs, capital outlay, and retirement of debt.
8. Lease of Public Property: All funds acquired by the City from the sale, lease, operation and maintenance of City owned real property, including privilege fees paid to the City for the abandonment of public rights-of-way, shall be paid into the Leased Property Fund. Expenditures from said fund shall be used exclusively for the acquisition, operation and maintenance of public property of the City, as well as any amounts committed to the General Fund.
9. Rate Studies: Water and Wastewater funds will conduct a professional rate study periodically, but in no event less frequently than every three years, to keep rates in-line with the actual cost of providing the services.

1. Deferring maintenance is a typical consideration during difficult budget times. Deferred maintenance can include items such as buildings, vehicles, computer hardware and computer software, roads, parks and trees. Deferred maintenance can be relatively benign, or it can be problematic and result in higher operating costs and other long-term issues.
2. Deferring maintenance is an acceptable budget reduction tool. However, it should be done with a clear understanding of the impacts, and management should identify the implications.
3. Whether there is deferred maintenance or not, periodic reports should be provided by staff of the maintenance status of all major assets such as building, fleet, roads, and utilities.
4. The extent of deferred maintenance, whether temporary or permanent, should be an explicit decision made by Council.

The Enterprise Funds will budget for an operating transfer to the General Fund in the amount of 6% of gross operating revenues to be used for additional funding for General Fund operating expenses.

1. General obligation debt shall only be considered within the Capital Improvement Program (CIP). Issuance of general obligation debt shall be preceded by a voter approved referendum. Repayment of all General Fund debt of the City will be clearly shown as expenditures for principal and interest in the annual General Fund operating budget.
2. The City will prevent any default on debt and strive to maintain an underlying issuer’s credit rating of at least AA. General Obligation bonds, by definition, need approval of the citizens, via referendum. Revenue Bonds or Notes may be used for major purchases or projects but will normally be financed for 20 years or less. Long-term debt shall not be used to finance current operations. The City prefers to “pay-as-you-go” and issue new debt only if there is no other means to achieve the objective or if there is an economic advantage, such as expected increases in a project’s future cost or potential revenue returns from the asset anticipated in the future. Refinancing is considered if it is possible to get present value savings in excess of three percent.