Fort Walton Beach Council agenda — 08-18-08 special agenda - budget — reading text

CityCity ofof FortFort WaltonWalton Beach,Beach, FLFL 25-25-  f Budget Overview u; J attend and participate. During September, two public hearings on the millage ( i. e. property tax) rate and budget are held before final budget consideration per State Statute. These meetings are advertised as part of the agenda and Florida Law requires certain newspaper advertisements prior to the second and final budget hearing. At the public hearings, the public may make formal comment either for or against the proposed budget and ask questions of City Council about the budget. Budget adoption occurs in September after City Council deliberations and two public hearings. City Council may take action to modify the proposed budget at its discretion. Prior to budget adoption, City Council must adopt a millage rate to support budgeted funding levels. An adopted budget is published no later than October 1. Budget Maintenance Budget maintenance is a year -round activity of the Department Directors, Finance Director, and Budget & Grants Manager. Spending control mechanisms include Finance Department review of purchase requisitions and departmental review of reports presenting budget versus actual revenues and expenditures. These financial reports are prepared and reviewed by staff monthly and provided to City Council quarterly to identify and communicate any spending variances. Performance measures are prepared and reported to Council quarterly to monitor progress against goals and objectives, citizen satisfaction, and benchmarks. Operationally, the City functions at a fund level basis allowing budget transfers within funds for individual line items that exceed the budgeted amount without a formal budget amendment. Budget transfers are used only to transfer appropriations between line items, not to increase the total budget or to transfer resources between funds. The City Manager is authorized through the annual budget resolution to approve budget transfers. Transfers between funds and increases to a fund' s total budget are permitted through the formal budget amendment process adopted via resolution by City Council. Budget transfers are currently performed in accordance with Administrative Policy, but a resolution outlining the procedures will be brought to City Council for formal adoption at the budget meetings in August. Annual appropriations lapse at fiscal year end with the exception of encumbrances and appropriations related to multi -year projects and other items identified by City Council to be carried over to the next fiscal year. These carry -overs are included in the ensuing year's adopted budget. Budget Amendment Per F. S. 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 budget resolution provides that the budget may be amended by resolution provided that a corresponding funding source supports any additional expense. Although the budget may be amended periodically throughout the year, a resolution is traditionally prepared mid -year and at year -end to record unanticipated activity. Frequently, the budget amendment is to record grants awarded to the City or other actions previously approved by City Council. The budget amendment increases or decreases the total amount of the adopted budget of each fund. However, any increase in the budget must be supported by a corresponding revenue source. BUDGET BASIS & FUND STRUCTURE Annual appropriated budgets are adopted by resolution for all governmental and proprietary funds. However, the City is not legally required to budget for proprietary or fiduciary funds and those budgets are not included in the City's audited financial statements. Budgets for the General Fund, Special Revenue Funds, Debt Service Fund, Capital Projects Fund, and Enterprise Funds are prepared on a basis consistent with generally accepted accounting principles GAAP) and generally follow this basis of accounting with few exceptions. During the year, the City's accounting system is maintained on the same basis as the adopted budget, which enables department budgets to be easily monitored through the accounting system. The major difference between this budget and GAAP for governmental funds is that certain expenditures ( e. g. compensated absences and depreciation) are not recognized for budgetary purposes, but are recorded in the accounting system at year -end. For enterprise funds, the difference between this budget and GAAP is that debt principalI payments and capital outlay ( i. e. fixed assets) are budgeted as expenditures for budgetary purposes, but City of Fort Walton Beach, FL 26- Budget Overview depreciation and compensated absences are shown on the financial statements. Staff believes this provides a better day -to -day financial plan. However, all activity is recorded in the accounting system at year -end in accordance with GAAP. An important concept in governmental accounting and budgeting is the division of the budget into Funds are separate fiscal accounting entities. Budgeting and accounting for categories called funds. revenues and expenditures in this manner is called fund accounting. Fund accounting allows a government to budget and account for revenues and expenditures restricted by law or policy. Governments may use any number of individual funds in their financial reporting; however, generally accepted accounting principles ( GAAP) require all these individual funds to be aggregated into specified fund types.Any fund constituting 10% or more of the appropriated budget is considered a " major" fund. General Fund —Accounts for all financial resources not accounted for in other funds. Special Revenue Funds — Account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. Law Enforcement Trust Fund — grants, forfeitures Law Enforcement Training Fund —traffic fines Community Development Block Grant —entitlement grant Community Redevelopment Agency —tax increment financing ( i. e. ad valorem taxes) Beal Memorial Cemetery Perpetual Fund — lot, crypt, and niche sales Debt Service Fund —Accounts for the accumulation of resources for, and the payment of, general long- term debt principal and interest. Capital Projects Fund —Accounts for financial resources to be used for the acquisition or construction of major capital facilities, thereby more accurately accounting for a variety of one -time facility improvements and construction projects. Enterprise Funds — Account for operations that are financed and operated in a manner similar to a private business — where the intent of the governing body is that the cost ( expenses, including depreciation) of providing the services to the public on a continuing basis be financed and recovered primarily through user charges. Related capital projects are accounted for in the individual enterprise funds. Utilities Fund —water, sewer Sanitation Fund — garbage, yard waste Golf Fund —golf courses Stormwater —stormwater City of Fort Walton Beach Budgetary Funds Governmental l( Proprietary Funds I l Funds Other General Fund Special Revenue Governmental Enterprise Funds Major Fund) Funds Funds Law Enforcement Debt Service Utilities Fund Trust Fund Fund ( Major Fund) Law Enforcement l Capital Projects Sanitation Fund Training Fund J Fund ( I Major Fund) Community Development Golf Fund Block Grant Fui Community Redevelopment 1 Storm Water Fund Agency Fund ) Beal Memorial Cemetery Fund City of Fort Walton Beach, FL 27_ Budget Overview W,W, The chart below illustrates the relationship between the City's fund financial structure ( e. g. accounting) and the City's departments ( e. g. operations). Accounting Law Law Storm Department/ General CDBG CRA Utilities Sanitation Golf