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C. Basis of Accounting <br />Governmental funds and Expendable Trust Funds are accounted <br />for using the modified accrual basis of accounting. Their <br />revenues are recognized when they become measurable and <br />available. Substantially all sources of revenue are <br />accrued. <br />Expenditures are generally recognized under the modified <br />accrual basis of accounting when the related fund liability <br />is incurred, except for principal and interest on general <br />long -term debt which is recognized when due. <br />D. Budgets and Budgetary Accounting <br />The City follows these procedures in establishing the <br />budgetary data reflected in the financial statements: <br />1. The City Administrator submits to the City Council a <br />proposed operating budget for the fiscal year commencing <br />the following January 1. The operating budget includes <br />proposed expenditures and the means of financing them. <br />2. Public hearings are conducted to obtain taxpayer <br />comments. <br />3. The budget is legally enacted through passage of a <br />resolution. <br />4. The City Council may authorize transfer of budgeted <br />amounts between departments within any fund. <br />5. Formal budgetary integration is employed as a management <br />control device during the year for the General Fund and <br />Special Revenue Funds. Budgetary control for Capital <br />Projects Funds is accomplished through the use of <br />project controls. <br />6. Budgets for the General and Special Revenue Funds are <br />adopted on a basis consistent with generally accepted <br />accounting principles (GAAP). <br />7. Budgetary control is maintained at the object of <br />expenditure category level within each activity. There <br />are no legal provisions relating to the level of <br />budgetary control. <br />Budgeted amounts are as originally adopted, or as amended by <br />the City Council. Budgeted expenditure appropriations <br />lapse at year -end. <br />