Proposed 2006 Gen Fund PHearing - Laserfiche WebLink

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The budgeting process includes reports to the City Council that explain key fiscal developments and note significant deviations from the current budget. The Council is notified whenever changing operations or unexplained developments require budget revisions. Itl addition to tile annual operating budget, the city considers advanced planning for capital improvements. Efficient capital financing is aided by preparing, adopting, and implementing a multi- year capital improvement program and budget [CIP]. The CIP matches available resources with proposed public i~nprovements, facilities, and equipment needs. Budget Format Two aspects of the budget format need consideration: the actual forms city officials use in preparing the budget and the classification of accounts or account titles for summarizing the data. The State Auditor has prescribed a standard chart of accounts for use in city budgeting and accounting. Every city must follow this classification not only in maintaining financial records, but also in preparing the annual budget. The City has 75 funds of which the General Fund is that which receives revenue from the general tax levy. Although cities do not have to budget for revenues from utilities and special assessments, the Council may include them when making budget estimates. The financial activity in these funds depends on the number of special assessments or the business activity of the utility operation. Because it is not always possible to anticipate these activity levels in advance, accurate budgeting is difficult. For expenditures control, however, some advance estimates are helpful. Estimating Revenues and Expenditures The first step in estimating revenues is to individually identify the revenue sources. The city reviews each source, its past performance, and future expectations, taking into consideration any economic trends or institutional changes that might disrupt the pattern. After estimating all other revenues, the City determines the amount of money needed from property taxes. This sum is generally an amount sufficient to balance the budget. When possible, the property tax levy should bring the projected year end fund balance to a level able to cover emergencies and contingencies. Following this process results in a balanced budget. Cities mnst estimate several kinds of expenditures, including various operating expenses, capital outlay expenditures, and debt redemption. Certain current expenses consist of relatively fixed charges and are comparatively easy to estimate. These are items such as rent, interest expense, salaries, contractual costs, and other charges which the city establishes by agreement and which it cannot reduce during the budget year. Budgetary allowance for these costs can be on the basis of past experience plus projected increases such as negotiated wage settlements with employee groups. Public Hearing - December 5, 2005