Fort Walton Beach Council agenda — 8-11-14--proposed budget — reading text

adoptedadopted budgetbudget isis publishedpublished nono laterlater thanthan OctoberOctober 1.1. BudgetBudget MaintenanceMaintenance BudgetBudget maintenancemaintenance isis aa yearyear- - roundround activityactivity ofof thethe Department Department Directors,Directors, FinanceFinance Director,Director, andand Financial Financial Analyst.Analyst. SpendingSpending controlcontrol mechanisms mechanisms includeinclude FinanceFinance DepartmentDepartment reviewreview ofof purchasepurchase requisitionsrequisitions andand departmentaldepartmental reviewreview ofof reportsreports presentingpresenting budgetbudget versusversus actualactual revenues revenues andand expenditures.expenditures. TheseThese financialfinancial reportsreports areare preparedprepared andand reviewedreviewed byby staffstaff monthlymonthly andand providedprovided toto CityCity CouncilCouncil quarterlyquarterly toto identifyidentify andand communicate communicate anyany spendingspending variances.variances. PerformancePerformance measuresmeasures areare preparedprepared andand reportedreported toto CouncilCouncil quarterlyquarterly toto monitormonitor progressprogress againstagainst goalsgoals andand objectives,objectives, citizencitizen satisfaction,satisfaction, andand benchmarks.benchmarks. AnnualAnnual appropriationsappropriations lapselapse atat fiscalfiscal yearyear endend withwith thethe exceptionexception ofof encumbrancesencumbrances andand appropriations appropriations relatedrelated toto multimulti - - yearyear projectsprojects andand otherother itemsitems identifiedidentified byby CityCity CouncilCouncil toto bebe carriedcarried overover toto thethe nextnext fiscalfiscal year.year. TheseThese carrycarry - - oversovers areare includedincluded inin thethe ensuingensuing year'year' ss adoptedadopted budgetbudget resolution.resolution. BudgetBudget TransfersTransfers Operationally,Operationally, thethe CityCity functions functions atat aa fundfund levellevel basisbasis allowingallowing budgetbudget transfers transfers withinwithin fundsfunds forfor individualindividual lineline itemsitems thatthat exceedexceed thethe budgetedbudgeted amountamount withoutwithout aa formalformal budgetbudget amendment.amendment. BudgetBudget transferstransfers areare usedused onlyonly toto transfertransfer appropriationsappropriations betweenbetween lineline itemsitems withinwithin aa fund,fund, notnot toto increase increase thethe totaltotal budgetbudget oror toto transfer transfer resourcesresources betweenbetween funds.funds. BudgetBudget transferstransfers areare permittedpermitted inin accordanceaccordance withwith AdministrativeAdministrative PolicyPolicy FINFIN - - 13.13. AllAll budgetbudget transferstransfers areare performedperformed inin thethe ChyChy ofof FortFort WahonWahon Beach.Beach. FLFL Budget Overview City' s accounting system by the Finance Department. Budget Amendment Per Florida Statute 166. 241, the adopted budget may be revised with a budget amendment approved by City Council in the same manner in which the budget was adopted. The resolution adopting the annual budget allows the budget to be amended by resolution provided that a corresponding funding source supports any additional expense. Transfers between funds and increases to a fund' s total budget are permitted by resolution adopted by City Council. Frequently, the budget is amended to record grants awarded to the City or other mid -year activities approved by City Council. The budget amendment increases or decreases the total amount of the adopted budget of each fund. FINANCIAL POLICIES The financial policies presented below set forth the basic framework for the overall financial management of the City, as well as provide guidelines for evaluating current activities and proposals for future programs. Financial Planning Long -Ranee Planning — Update the Vision Plan every ten years and hold a Budget Policy Meeting annually to ensure current and proposed programs and services reflect the values shared by citizens, City Council, and staff and to evaluate the impact on revenues and/ or reserves. Prepare five -year General Fund revenue & expenditures projections and five -year Enterprise Fund pro -formas in conjunction with current year budget development to highlight the long -term impact of current decisions. These forecasts are provided in graphical format on page 210. Asset & Infrastructure Inventory — Evaluate ( and reprioritize as necessary) the five -year capital needs of the City annually as part of the budget process. Assets, as defined for purposes of this review, include computers, vehicles, and motorized equipment. Infrastructure improvements e. g. street resurfacing, water /sewer lines, parks) are evaluated during development of the five - year capital improvements program. Balanced Budget — Prepare a balanced budget each fiscal year in accordance with Florida statutory requirements for municipalities. The budget is considered balanced if the total of all available financial resources ( either on hand at the beginning of the fiscal year or generated during the fiscal year) equals or exceeds the total of all financial requirements ( either planned spending during the year or funds required to be on hand at the end of the fiscal year). The requirement for a balanced budget is established at the fund level and must be met for each individual fund budgeted. When anticipated revenues exceed budgeted expenses, a non - operating governmental expenditure line " Fund Balance —Reserved for Future Appropriation" or enterprise expense line " Reserved -Undesignated Net Assets" accounts for the excess. In reverse, when budgeted expenses exceed anticipated revenues, a non -operating governmental revenue line. "Appropriation from Unassigned Fund Balance" or enterprise revenue line " Appropriation from Net Assets" funds the overage. Although the budget adopted by City Council is balanced, the budget may become unbalanced during the year due to a natural disaster, civic emergency, grant award, or other City Council action. When these changes occur, a budget amendment must be adopted by resolution of City Council. Chy of Fort Wahon Beach. FL Budget Overview Financial Monitoring — Prepare monthly financial reports for the City Manager and Finance Director detailing revenues and expenditures by fund, department, and division. Identify and explain any significant variances between budget and actual. Report financial information to City Council on a quarterly basis. Revenues Taxes — Maintain the millage and other tax rates at levels commensurate with the service levels being provided. Services which have a citywide benefit shall be financed with revenues generated from a broad base, such as property and other taxes. Evaluate annually as part of the budget process. User Fees — Maintain fees and rates at appropriate levels to fund their corresponding purpose, especially in the Enterprise funds. Services where the customer determines the use shall be financed with user fees, charges, and assessments related to the level of service provided. User fees shall be maximized in lieu of general revenue sources for services that can be individually identified and where costs are directly related to the level of service. The extent to which the total cost of providing the service is recovered depends on the nature of the service. For governmental services provided for the public good ( e. g. police and fire protection, street maintenance, and land use regulation), it may be appropriate for a substantial portion of the cost to be borne by the taxpayers. For proprietary services provided for the enjoyment of specific residents ( e. g. recreation programs, cemetery operations), total cost recovery may be warranted. Evaluate annually as part of the budget process. Non -Recurring Revenues — Fund recurring expenditures with recurring revenues. One -time revenues will be reserved for future emergencies or projects identified by City Council to the greatest extent possible. Unpredictable Revenues — Budget unpredictable revenues at conservative levels ( e. g. building permits) to safeguard against a shortfall. Expenditures Operating Expenses — Pay all current year operating expenses with current year revenues and/ or available fund balance. Contingencies — Appropriate contingency funds in the General Fund and Enterprise Funds to guard against unanticipated price increases ( e. g.. fuel, utilities), emergency repairs, or revenue shortfalls. The State of Florida allows up to a maximum of 10% of anticipated revenues to be allocated toward contingencies. City practice is to budget 1% of personnel and operating expenses as contingency funds to be used as a last resort. Budget residuals ( excess budget funds transferred out of an account by the Finance Department once the budgeted expense has been incurred) will be exhausted before contingency funds are used. The City currently meets this policy for the applicable funds. Special Project Carryovers —Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. These are projects and/ or purchases that are incomplete as of September 30 of any fiscal year that will be continued and made part of the appropriations for the ensuing year. These are budget funds for large items ( usually capital purchases, projects, or studies) that were authorized and appropriated by City Council in a prior fiscal year but were not spent due to time constraints. City of Fort Walton Beach, FL Budget Overview Encumbrance Carryovers — Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. In general, purchase orders close out at the end of the fiscal year unless they are identified for carryover as part of the budget process of the ensuing year. These encumbrances were authorized, budgeted, and appropriated by City Council in a prior fiscal year but were not fully receipted in due to the ongoing nature of the expense. Fund Balance ( governmental funds) Fund balance refers to the difference between current financial assets and liabilities reported in a governmental fund. Since all related assets and liabilities are not reported for governmental funds, fund balance is considered more of a liquidity measure than a net worth measure. Credit rating agencies monitor fund balance levels and strongly consider unrestricted fund balance when determining a local government' s creditworthiness. Fund balance is also important to guard against unanticipated events that would adversely affect the financial condition of the City and jeopardize the continuation of necessary public services. There are five types of fund balance: R PCtrirti- d 1. Nonspendable ( inherently nonspendable) — resources that cannot be spent because of form ( e. g. inventory, long -term loans receivable) or because they must be maintained intact ( e. g. endowment principal). 2. Restricted ( externally enforceable limitations) — resources with