Municipal Budgeting 101

Municipal Budgeting 101

PO Box 519419 N. Broadway StreetAbilene, KS 67410(785) 263-2550www.abilenecityhall.comhttp://abilene-ks.blogspot.com

City of Abilene, Kansas

• City of the Second Class

• 2010 Census Population of 6,844

• $16.8 million budget

• 64 regular FTE ~150 employees in summer

• Commission-Manager form of government:

▫ Governed by five at-large City Commissioners responsible for policy

▫ Day-to-day administration by City Manager

What is a budget?

• Tool to help allocate scare public resources to community services or issues.

• Mandated by K.S.A. 79-2925 et seq.

• Serves as:

▫ Financial Plan

▫ Resource Allocation Plan

▫ Policy Guide

▫ Communication Tool

Budgetary Law

• Budgetary Law: Kansas budgetary law requires local units of government to adopt a balanced budget through a process open to the public.

• Once approved, the unit of government is bound by the adopted budget and may not raise taxes or spend moneys other than as provided therein.

• K.S.A. 79-2925 et seq.

Budgetary Law

Citizens can help by sharing their thoughts and ideas on where expenditures should be made and how much should be spent.

According to Kansas law, the budget must be balanced for each fund. This means that total revenues in each fund must equal total expenditures.

Cash Basis Law

• Cash Basis Law: Prohibits cities from creating indebtedness unless there is money on hand in the proper fund, unencumbered by previous commitments, with which to pay the indebtedness.

• K.S.A. 10-1101 et seq.

April •Preliminary review of current year revenues and expenditures;•Begin public engagement.

May •Preliminary budget discussion with City Commission;•Distribute budget worksheets to departments;•Distribute notices to external agencies.

June – July •City Commission reviews proposed CIP and operating budget.

July •Final review of budget by City Commission;•Public Hearing on Budget.

August •City Commission adopts budget;•Approved budget filed with County Clerk.

Funds

The accounts of the City are organized on the basis of funds.

Each fund is considered a separate accounting entity and can be thought of as its own checkbook.

Types of Funds

• General Fund

• Special Revenue Funds

• Bond and Interest Fund

• Enterprise Funds

General Fund

• Main operating fund of the City

• Used for general operation of the City

Special Revenue Funds

• Account for revenues resulting from specific taxes, governmental grants, and other revenue sources

• Support specific functions or activities of the City

Examples include: Library, Tourism and Convention, Special Parks & Recreation, Special Alcohol & Drug, Special Highway

Bond and Interest Fund

• Accounts for the payment of principal and interest on the City’s General Obligation (G.O.) Bonds

Enterprise Funds

• Include water, wastewater, and storm water utilities, and recycling

• Self-supporting funds

• User fees support all operational and capital costs

Capital Improvement Program

• Long-term capital planning document

• Used to plan, budget, and finance the purchase and/or construction of large capital infrastructure, facilities, equipment, and other capital assets

Capital Improvement Program

• Three Tiers:

▫ Projects Programmed

▫ Projects for Further Review

▫ Projects Identified but Unfunded

• Funding Structures:

▫ “Pay-as-you-go”

▫ Mill levy or sales tax proceeds, user fees or other revenues sources

Major Sources of Revenue

• Ad Valorem Taxes

• Local Sales Taxes

• Franchise Fees

• Investment Income

• Utility Fees

• Court Fees

Major Expenditures

• Personnel

• Contractual Services

• Commodities

• Capital Outlay

• Debt Service

FY 2011 General Fund

FY 2011 General Fund Revenues(rounded figures in millions of dollars)

$1.8

$1.3

$0.2

$1.2

$0.6

$0.4

$0.2 $0.3

Unencumbered Balance

Property Tax

Motor Vehicle Tax

Local Sales Tax

Franchise Fees

Intergovernmental Aid

Utility Transfers

Miscellaneous

FY 2011 General Fund Revenues

31%

22%

3%

19%

10%

7%

3%5%

Unencumbered Balance

Property Tax

Motor Vehicle Tax

Local Sales Tax

Franchise Fees

Intergovernmental Aid

Utility Transfers

Miscellaneous

FY 2011 General Fund Expenditures(rounded figures in millions of dollars)

$2.0

$1.2 $0.7

$1.2

$0.1

$0.3

$0.3 $0.2

Administration

Police

Fire

Streets

Flood Control

Park Facilities

Community Development

Court

General Fund Expenditure Breakdown

Administration,$0.34

Community Development, $0.05

Fire, $0.11

Flood Control, $0.02

Streets, $0.20

Park Facilities, $0.05

Police, $0.20

Court, $0.03

General Fund Revenues v. Expenditures

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2005 2006 2007 2008 2009 2010 2011B

Mil

lio

ns

Revenue Expenses

The City Commission authorized $200,000 for downtown street improvements.

Assessed Valuation and Mill Levy

0

5

10

15

20

25

30

35

40

$-

$10

$20

$30

$40

$50

$60

1994 1998 2002 2006 2010

Mil

lio

ns

Assessed Valuation Mill Levy

Mill Levy Breakdown

City, $0.26

State, $0.01

County, $0.33

Rec Commission, $0.02

USD 435, $0.35

Hospital District, $0.02

Cemetery, $0.01

Mill Levy Calculation

Appraised Value: $106,800 (median)

1. Calculate Assessed Value

$106,800 (11.5%) = $12,282

2. Calculate Property Taxes

$12,282/1000 = 12.282

12.282(126.793) = $1,557.27 per year

An increase of 1 mill = $51,679 in new revenue

Municipal Services

• Law Enforcement

• Fire Protection

• Park Maintenance

• Municipal Court

• Abilene Airport

• Community Development

• Building Inspections

• Code Enforcement• Street Maintenance• Swimming Pool• Water Utility• Sewer Utility• Storm Water Utility• Recycling Center• Recreation Programs

Mill Levy Comparison

25.855 33.454 37.61148.474 54.915

70.146

122.55 126.793136.385

145.138164.13

176.341

City Levy

Total Levy

Sales Tax Comparison

7.30%

8.15% 8.20% 8.80% 8.80%9.55%

Chapman Abilene Salina Herington Clay Center

Junction City

FY 2011 Miscellaneous Funds

Other Tax-Levied Funds

Fund Expenditures Ad Valorem Taxes

Debt Service 1 $692,259 $133,944

Airport $68,440 $24,000

Library $267,642 $233,744

Fire Apparatus 2 $60,091 $30,000

Capital Improvement 2 $425,744 $25,000

Recreation Commission 3 $528,252 $239,745

1 Quasi-operational funds2 Capital funds (non-operational)3 Mill levy approved by Recreation Commission

Non-Tax-Levied Funds

Fund Expenditures Funding Source

Special Highway $617,822 Kansas Gas Tax

Recycling $375,212 Recycling Fees

Special Parks and Recreation $47,042 Local Alcohol Tax

Special Alcohol and Drug $23,937 Local Alcohol Tax

Storm Drainage $572,335 Storm Drainage Fee

Tourism and Convention $230,360 Transient Guest Tax

Non-Tax-Levied Funds

Fund Expenditures Funding Source

Special Liability $16,067 Transfer

Equipment Reserve $326,731 Transfer

Water Equipment Reserve $778,355 Transfer

Sewer Equipment Reserve $230,319 Transfer

Special Revenue Community Center $148,666 Sales Tax (sunset)

Special Revenue Library/Pool $418,790 Sales Tax

FY 2011 Water Fund

FY 2011 Water Fund Revenues(rounded figures in millions of dollars)

$1.5 $0.2

$0.2

$0.2

$0.3 Water Sales

Unencumbered Balance

Penalties

Water Protection Fee

Miscellaneous

FY 2011 Water Fund Revenues

85%

11%

1% 1% 2%

Water Sales

Unencumbered Balance

Penalties

Water Protection Fee

Miscellaneous

FY 2011 Water Fund Expenditures(rounded figures in millions of dollars)

$0.5

$0.3

$0.2 $0.7

$0.6 Production

Distribution

Administration

Transfer

Debt Service

Water Fund Expenditures Breakdown

Production, $0.31 Distribution, $0.19

Administration, $0.13

Transfers, $0.04 Debt Service, $0.33

Water Fund Revenue v. Expenditures

$-

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

2005 2006 2007 2008 2009 2010 2011B

Mil

lio

ns

Revenue

ExpensesThe City Commission has previously elected to use reserves rather than increase water rates, although a rate increase was approved in 2010. Revenues are projected to approach balance with expenditures. Future rate increases will enable the Water Fund to eventually surpass this milestone.

FY 2011 Sewer Fund

FY 2011 Sewer Fund Revenues(rounded figures in millions of dollars)

$1.4

$1.8

$0.1

User Charges

Unencumbered Balance

Miscellaneous

FY 2011 Sewer Fund Revenues

43%

55%

2%

User Charges

Unencumbered Balance

Miscellaneous

FY 2011 Sewer Fund Expenditures(rounded figures in millions of dollars)

$0.5

$0.3

$0.2 $0.7

$0.6 Production

Distribution

Administration

Transfer

Debt Service

Sewer Fund Expenditures Breakdown

Collection, $0.05

Treatment, $0.13

Transfers, $0.04

Administration, $0.61 Debt Service, $0.19

Administration includes unencumbered carry-over balance.

Sewer Fund Revenue v. Expenditures

$-

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

2005 2006 2007 2008 2009 2010 2011B

Mil

lio

ns

Revenue

Expenses

Municipal Debt

Types of Municipal Debt

• Bonds

▫ General Obligation (G.O.) - 22% of all debt

▫ Revenue - 0% of all debt

▫ G.O. Special Benefit – 37% of all debt

• Lease Purchases - 2% of all debt

• State Revolving Loans – 39% of all debt

• Certificates of Participation – none outstanding

• Temporary Notes – none outstanding

Municipal Debt

• Total Outstanding Debt: $28 million

• State Water Revolving Loan: $856,000

• State Wastewater Revolving Loan: $10 million

• Lease Purchase Agreements: $623,458

Municipal Debt

• G.O. Debt: $16.5 million

▫ First Street Project: $2.5 million

▫ Library and Pool Renovation: $3.6 million

• G.O. Debt restricted to 30% assessed valuation

• 2011 Statutory Debt Limit is $15.5 million (94%)

• G.O. Special Benefit : $10.4 million (excluded from statutory limit)

Budget Forum

• “Budget Choices” Forum:

▫ May 5th at 7:00 pm

▫ Eisenhower Visitors Center Auditorium

• Hands-on budget exercise;

• Prioritization and decision-making;

• Develop a “mock” budget for Abilene; and

• Input will be provided to the City Commission.