The City prepares an annual budget in which each department within the City government is required to submit its estimate to the City Manager. The City Manager reviews the estimates and other data and recommends the annual budget to the Common Council under the following guidelines and procedures.

1. Budget preparation begins in October with departments assessing their needs and formulating their budget requests based on guidance from the City Manager. Department budget requests are due by December 31st of each year.

2. Revenue estimates are derived from a review of current and projected economic indicators, current and proposed federal and state legislation, knowledge of future events in the City and a review of historic trends.

3. Meetings are held between the departments and the City Manager to discuss their budget requests. Requests from departments are reviewed and evaluated for priority by the City Manager.

4. Meetings are held with the Finance Committee and other Council Committees as appropriate to review and discuss the budget requests.

5. Based on estimated revenues, funding is requested by the City Manager for the programs, services and staffing required to maintain an essential level of service or to provide for enhancements to programs identified as priorities by City Council.

6. City Council advertises the proposed real estate tax rate (mid to late March).

7. Prior to April 30 of each year, the City Manager submits to the Common Council a proposed operating and capital budget for the next fiscal year commencing the following July 1. The operating and capital budget includes proposed expenditures and the means of financing them.

8. City Council reviews the proposed budget and a public hearing is held to ensure the budget is responsive to citizen needs and to provide the public with an opportunity to comment.

9. After careful deliberation, the proposed budget, as modified for additions and deletions, the real estate tax rate and all other rates and levies are enacted by City Council as the adopted budget.

10. By law, local government budgets must be balanced; i.e., expenditures may not exceed revenues.

11. Prior to June 30, the annual budget is legally enacted through passage of an Appropriations Ordinance. The appropriated annual budget is adopted for the Governmental, Proprietary, and Fiduciary Funds of the primary government and the Winchester Parking Authority (WPA) and the School Board Component Units.

12. The Adopted Operating Budget takes effect July 1, the beginning of the fiscal year.

13. The Appropriations Ordinance is adopted at the fund, function and department level and places legal restrictions on expenditures at the departmental level. The appropriation for each department can be revised only by the Common Council. The City Manager is authorized to transfer budgeted amounts within general government departments. The School Board is authorized to transfer budgeted amounts within the School System’s departmental categories.

14. All budgets are adopted on a basis substantially consistent with generally accepted accounting principles.

15. Appropriations lapse on June 30 for all City funds. Capital Improvement projects not completed at the fiscal year may be re-appropriated in the following budget year.

16. The budget can only be amended by the City Council after proper notice and public hearing.

The budget may be amended or revised in several ways. The City Manager is authorized to transfer amounts within departments. All other amendments in the form of transfers between departments or supplemental appropriations must be approved by City Council. In addition, any amendment which exceeds one percent of the total expenditures shown in the currently adopted budget must be accomplished by publishing a notice of a meeting and a public hearing once in a newspaper having general circulation in the City at least seven days prior to the public hearing date. After hearing from citizens, City Council may amend the budget.

The City’s budget is adopted annually on a basis consistent with generally accepted accounting principles (GAAP). Governmental and Fiduciary Funds use the modified accrual method of accounting under which revenues are recognized when they are both measurable and available to finance current expenditures; and expenditures are recognized when the services are incurred, or goods received. Enterprise Funds use the full accrual method of accounting, which recognizes the financial effect of events that impact the fund during the accounting period, regardless of whether cash was received or spent. The remaining funds are presented using the modified accrual method. All budget appropriations lapse at year-end. The accounting method used for City budgeting does not materially differ from that used for financial reporting (all funds), with the notable exceptions of depreciation and amortization, which are excluded for budgeting purposes and are included in the City’s Comprehensive Annual Financial Report.