Glossary

FY 2021-2022 Annual Budget

Accrual Basis of Accounting


A basis of accounting in which revenues are recognized in the accounting period in which they are earned, and expenses are recognized in the period in which they are incurred.


Account


A term used to identify an individual asset, liability, expenditure control, revenue control, encumbrance control, or fund balance.


Accounts Payable


A short-term liability account reflecting amounts owed to private persons or organizations for goods and services received by a government.


Accounts Receivable


An asset account reflecting amounts due from private persons or organizations for goods and services furnished by a government.


Accrual Accounting


A basis of accounting in which revenues are recognized in the period in which they are earned and become measurable, and expenes are recognized in the period incurred instead of when cash is actually received or spent.


Adopted Budget


The budget as modified and finally approved by the City Council. The adopted budget is authorized by ordinance that sets the legal spending limits for the fiscal year.


Ad Valorem Tax


A tax levied on the assessed valuation of land and improvements.


Appraised Value


The estimated value of property for the purpose of taxation, as established by the Tarrant Appraisal District.



Appropriation


An authorization made by the City Council that permits officials to incur obligations against and to make expenditures of resources. Appropriations normally are made for fixed amounts at the department level and cover the operating budget for a one-year period.


Arbitrage


With respect to the issuance of municipal securities, arbitrage usually refers to the difference between the interest paid on tax-exempt bonds and the interest earned by investing the proceeds of the bonds in higher-yielding taxable securities. Federal income tax laws generally restrict the ability to earn positive arbitrage in connection with tax-exempt bonds.


Assessed Valuation


A valuation set upon real and personal property by the Tarrant Appraisal District as a basis for levying taxes.


Audit


A standardized, systematic and independent examination of data, statements, records, operations and performances of an enterprise for the purpose of examining for compliance with standardized procedures for managing cash on hand, receipts, payments, investments, and other allocations of monetary resources, capital assets or the use of personnel time and expertise.


Balanced Budget


A budget adopted by the City Council and authorized by ordinance where the proposed expenditures are equal to or less than the proposed revenues plus fund balances.


Basis of Accounting


A term used referring as to when revenues, expenditures, expenses, and transfers - and related assets and liabilities - are recognized in the accounts and reported in the City's financial statements.


Bond


A written promise to pay a sum of money on a specific date at a specific interest rate.


Budget


The City's financial plan that contains both the estimated revenues to be received during the year and the proposed expenditures to be incurred to achieve stated objectives.


Budget Amendment


A formal legal procedure utilized by the City to revise a budget during a fiscal year.


Budget Calendar


The schedule of dates used as a guide to complete the various steps the budget preparation and adoption process.





Budget Message


The opening section of the budget document from the City Manager that provides the City Council and the public with a general summary of the most important aspects of the budget. Sometimes referred to as a "transmittal letter."


Budgetary Control


The control of management of the organization in accordance with an approved budget for the purpose of keeping expenditures within the limitations of available appropriations and revenues.


Capital Assets


Long-term assets, such as buildings, equipment and infrastructure, intended to be held or used in operations.


Capital Outlay


An expenditure which results in the acquisition of or addition to capital assets, and meets these criteria: having an anticipated useful life or more than one year; can be permanently identified as an individual unit of property; belonging to one of the following categories - land, buildings, machinery and equipment, or infrastructure; constitutes a tangible, permanent addition to the value of City assets; cost generally exceeds $5,000; does not constitute repair or maintenance; and is not readily susceptible to loss. In the budget, capital outlay is budgeted as expenditures in all fund types.


Capital Improvement Program


A plan for purchasing capital expenditures over a period of years to meet capital needs arising from the long-term work program. It sets forth each project or other contemplated expenditure in which the City is to have a part and specifies the full resources estimated to be available to finance the projected expenditures.


Capital Project Fund


A fund used to account for the financial resources to be used for the acquisition or construction of major capital facilities, infrastructure, or equipment, usually financed by the issuance of debt.


Certificates of Obligation


Tax-supported bonds that are similar to general obligation bonds and can be issued after meeting strict publication requirements and with final approval of the City Council.


Certified Appraisal Roll


The final property appraisals roll, as calculated by the Tarrant Appraisal District (TAD). The certified roll is required to be prepared by TAD by July 25 of each year.


City Charter


The document of a home rule City similar to a constitution, which establishes the City's government structure and provides for the distribution of powers and duties among the various branches of government.


City Council


The elected governing body of the City, consisting of the Mayor and six (6) Council members, collectively acting as the legislative and policy-making body of the City.


Contractual Services


The costs related to services performed for the City by individuals, business, or utilities.


Crime Control and Prevention Sales Tax


Approved by votes in 1996 to collect a 1/2% sales tax for the Crime Control and Prevention District purposes, and readopted in 2010 for an additional 20 year period.


Current Taxes


Taxies levied and due within one year.


Debt Service


The City's obligation to pay the principal and interest of all bonds and other debt instruments according to a predetermined payment schedule.


Debt Service Fund


A fund used to account for resources and expenditures related to retirement for the City's general obligation debt service, sometimes referred to as a "sinking fund."


Deficit


The excess of the liabilities of a fund over its assets; or the excess of expenditures over revenues during an accounting period; or in the case of proprietary fund, the excess of expense over income during an accounting period.


Delinquent Taxes


Taxes that remain unpaid after the date on which a penalty for nonpayment is attached. Property taxes are delinquent if not paid by January 31.


Department


A major administrative organizational unit of the City containing one or more divisions or activities.


Depreciation


A non-cash expense that reduces the value of an asset as a result of wear and tear, deterioration, action of the physical elements, inadequacy or obsolescence.


Distinguished Budget Presentation Program


A major administrative organizational unity of the City which indicates overall management responsibility for one or more activities.


Division


A major administrative organizational unity of the City which indicates overall management responsibility for one or more activities.




Encumbrance


An obligation, usually in the form of a purchase order, contract, or salary commitment, related to uncompleted contracts for goods or services. Used in budgeting, encumbrances are not classified as expenditures or liabilities, but are shown as a reservation of fund balance. Upon payment, encumbrances are recorded as expenditure and liquidated, thereby releasing the reservation of fund balance. Outstanding or unliquidated encumbrances at year-end are closed out.


Enterprise Fund


A fund established to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.


Expenditure/Expenses


The outflow of funds paid or to be paid for assets obtained or goods and services obtained regardless of when the expense is actually paid. An expenditure decreases fund balance.


Fiscal Year


The time period designated by the City signifying the beginning and ending period for the recording of financial transactions. The City's fiscal year is October 1 through September 30.


Franchise Fees (Taxes)


A fee (tax) paid by a public utility for the use of public property in providing their services to the residents of the City. The fee is typically calculated as a % of the utility's gross receipts.


Full-Time Equivalent (FTE)


A position for an employee working a 40 hour work week for 52 weeks a year. Based on 2,080 annual hours or 2,756 for firefighters.


Fund


A fiscal and accounting entity established to record receipt and disbursement of income from sources set aside to support specific activities or to attain certain objectives. Each fund is treated as a distinct fiscal entity where assets equal liabilities plus fund balances.


Fund Balance


Unless stated otherwise, the excess of a fund's current assets over its current liabilties; sometimes called working capital in enterprise funds.

General Fund


The fund used to account for financial resources except those funds required to be accounted for in another fund; the general fund is tax supported and includes the operations of most City services, i.e., police, fire, streets, parks and recreation, and administration.


General Obligation


Money owed on interest and principal to holders of the City's obligation bonds. The debt is supported by revenues provided from real property that is assessed through the taxation power of the City.


Generally Accepted Accounting Principles (GAAP)


Uniform minimum standards and guidelines for financial accounting and reporting.


Goal


A broad, general statement of each department's or division's desired social or organizational outcomes.


Governmental Funds


Funds generally used to account for tax-supported activities. The acquisition, use and financial resources and the related current liabilities are accounted for through governmental funds (General, Special Revenue, Capital Projects and Debt Service.


Grant


A contribution by a government or other organization to support a particular function. Typically, these contributions are made to local governments from state or federal governments.


Infrastructure


That portion of a City's assets located at or below ground level, including streets, water, and sewer systems.


Internal Service Fund


Internal Service Funds are used to account for the financing of goods or services provided by one fund or department to another fund or department on a cost reimbursement basis.


Levy


To impose taxes or special assessments. The total of taxes or special assessments imposed by a governmental unit.


Liability


Debt or other legal obligations arising out of transactions in the past that must be liquidated, renewed, or refunded at some future date. The term does not include encumbrances.


Long-term Debt


Debt with a maturity of more than one year after date of issuance.


Materials and Supplies


Expendable materials and operating supplies necessary to conduct the business of departmental activities.


Mixed Beverage Tax


A tax imposed on the gross receipts of a licensee for the sale, preparation or serving of mixed beverages.






Modified Accrual Basis


The basis of accounting under which expenditures other than accrued interest on general long-term debt are recorded at the time liabilities are incurred and revenues are recorded when received in cash, expect for material and/or available resources, which should be accrued to reflect properly the taxes levied and revenue earned.


No New Revenue Tax Rate


Defined by State law. In general, the tax rate that will rise the same amount of property tax revenue as the previous year, based on properties taxed in both years.


Objectives


A specific statement of desired end which can be measured.


Operating Budget


Plans of current expenditures and the proposed means of financing them. The annual operating budget is the primary means by which most of the financing, acquisition, spending and service delivery activities are controlled. The use of annual operating budgets is required by the City's Charter and State Law.


Ordinance


A formal legislative enactment by the governing body of a municipality.

Performance Measures


Specific quantitative measures of work performed within an activity or program. They may also measure results obtained through an activity or program.


Personnel Costs


The costs associated with compensating employees for their labor. This includes salaries and fringe benefits.


Proposed Budget


The financial plan initially developed by departments and presented by the City Manager to the City Council for approval.


Property Tax


An annual or semi-annual tax paid to one or more governmental jurisdictions based on the real and personal property's assessed valuation and the tax rate, done in compliance with the State Property Tax Code.


Proprietary Fund


A governmental accounting fund having profit and loss aspects; therefore, it uses the accrual rather than modified accrual accounting method. The two types of proprietary funds are the Enterprise Fund and the Internal Service Fund.





Ratings


Designations used by credit rating agencies to give relative indications of credit quality. Municipal bonds rated Baa or BBB and above are considered to be investment-grade.


Refunding Bonds


Bonds issued to retire bonds already outstanding.


Reserve


An account used to indicate that a portion of fund resources is restricted for a specific purpose, or it not available for appropriation and subsequent spending.


Resolution


A formal statement of opinion or determination adopted by an assembly or other formal group.


Revenue


Funds that the City receives as income. Revenue increases fund balance.


Sales Tax


A general tax on certain retail sales levied on persons and businesses selling taxable items in the city limits. The City's current sales tax rate is 8.25%, consisting of 6.25% for the State of Texas; 1% for the City; 0.5% for the Economic Development Corportation; and 0.5% for the Crime Control Prevention District.


SCADA


Acronym for Supervisory Control and Data Acquisition. An automated system that electronically monitors and controls water storage tanks, pumping stations, and water supply levels. The system monitors and coordinates water supply throughout the City in order to meet customer water demands, by allowing remote facilities to be operated from a central location.


Special Revenue Fund


A fund used to account for proceeds for specific revenue sources (other than special assessments, expendable trusts or for major capital projects) that are legally restricted to expenditures for specified purposes, or have been segregated by financial policy to be maintained separately.


Tarrant Appraisal District


The Tarrant Appraisal District legal entity that has been established in each Texas County by the State legislature for the purpose of appraising all property within the county or district. All taxing units within Tarrant County use the property values certified by TAD. TAD is governed by a board of directors, whose members are appointed by the individual taxing units within the district.


Tax Base


The total value of all real and personal property in the City as of January 1st of each year, as certified by Tarrant Appraisal District's Appraisal Review Board. The tax base represents the net taxable value after exemptions. (Also sometimes referred to as "assessed taxable value.")




Tax Levy


The result of multiplying the ad valorem property tax rate per one hundred dollars times the tax base.


Tax Rate


The rate applied to all taxable property to generate revenue. The tax rate is comprised of two components: the debt service (I&S) rate, and the maintenance and operations (M&O) rate.


Transfers


Transfers made from one City fund to another City fund for purposes such as reimbursement of expenditures, general and administrative services or debt service.


Unearned Revenue


Cash Received from customers in advance of services received. Recorded as a liability under general accepted accounting principles.


Voter Approval Tax Rate


A taxing unit's voter approval tax rate is a calculated rate that divides the overall property taxes into two categories - M&O and debt service. If a unit adopts a tax rate that is higher than the voter approval rate, an election is held for voters to approve the rate.


Working Capital


For enterprise funds, the excess of current assets over current liabilities. Working capital of a fund is important because budgeted expenditures of the fund must be provided for from cash receipts during the year supplemented by working capital carried over from prior years, if any.


Yield


The rate earned on an investment based on the price paid for the investment, the interest earned during the period held and the selling price or redemption value of the investment.