Basis of Budgeting

Fiscal Year 2024

Basis of Accounting versus the Basis of Budgeting

The basis of accounting is when the effects of transactions and events are recognized. The basis of accounting in accordance with generally accepted accounting principles will not be the same basis used in preparing the budget document.

The City of Stuart produces a "cash flow" budget document which differs from GAAP (Generally Accepted Accounting Principles) mainly in the fact we present any current expected revenues in the year being budgeted, as well as any expenses, represented as appropriations. The City's budget does reflect Capital Outlay expenditures in all funds, even Enterprise Funds, even though they may be capitalized for financial reporting. We also budget for Debt Service payments even in Enterprise funds as expenditures regardless of financial reporting presentation. The City does not budget for non-cash expenditures such as Depreciation since there is no actual cash flow out.

Balanced Budget

1. A balanced budget is a requirement of almost any budget process. A balanced budget is where the sources of money used to fund the budget are at least equal to the uses of the money. Sources include revenues, fund balances, reserves, and borrowings.

2. Generally, recurring expenditures will be funded with recurring revenues and nonrecurring revenues will be used only for nonrecurring expenditures. If surplus funds are available after funding of all required reserves, these surplus funds may be used in balancing the annual budget. Reserve funds are the last source to be used to balance the annual budget.

Budgetary Policies

1. The basis of budgeting is best described as a modified cash basis because funds are budgeted in the year expended. The adopted annual budget is the basis for the implementation, control, and management of that year’s programs and use of funds. The budget will reflect the needs being met, services provided, resources used, and sources of funds.

2. The operating budget will be based on the principle that current operating expenditures, including debt service, will be funded with current revenues creating a structurally balanced budget.

3. The budget will fully appropriate the resources needed for authorized regular staffing. At no time shall the number of regular full-time employees on the payroll exceed the total number of positions authorized by the City Manager. All personnel actions shall be in conformance with applicable Federal and State law and all City ordinances and policies.

4. The City Manager shall provide annually a budget preparation schedule outlining the preparation timelines for the proposed budget. Budget packages for the preparation of the budget shall be distributed to City departments in a timely manner for the Department’s completion. Department officials shall prepare and return their budget proposals as required in the budget preparation schedule.

5. Performance measurement indicators will be an integral part of the budget process. The departments will annually report progress against their respective performance measures.

6. Alternatives for improving the efficiency and effectiveness of the City's programs and the productivity of its employees will be considered during the budget process. Duplication of services and inefficiency in service delivery will be eliminated whenever they are identified.

7. Consistent with the annual budget process, a five-year capital improvement program will be approved.