Transcript Slide 1

The Budget Process
Tim Magee
Administrative Services (Finance) Director
City of Helena, Montana
[email protected]
406-447-8412
Approach
• Use the Local Government Budget Laws as an
outline (one law = one slide)
• Note each statute
– do not “present” details
– expand in response to Questions
• DO expand upon:
– Cash Flow, including Reserves
– Capital Planning and Financing
Handouts / E-Files
Briefly Explain the Use of Each
1.
2.
3.
4.
5.
6.
Excel – Personnel Sheet
Excel – Cash Flow Sheet
Excel – Statement of Changes (Fund Summary)
Word – Tax Increase Resolution
Word – Budget Resolution
Word – Tax Levy Resolution
Outcomes / Understanding
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The Budget Process
Making and communicating budget justifications
Tracking, Monitoring and Amending a Budget
Dealing with budget issues during the year
– changing circumstances / various scenarios
– budget problems
Helena’s Calendar
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January
Send Budget Instructions
Jan/Feb
Develop Department Budgets
March/April Manager’s Budget Review
April/ May
Preliminary Budget Presented
May/June
Comm. Budget Work Sessions
Early June
Notices of Budget Hearing
Late June
Budget Hearing & Adoption
“Back” into a Budget Development Calendar
Basic Budget Steps
• Give City Staff current budget copies and a
deadline to tell you what changes they want.
• Do a complete personnel worksheet
Basic Personnel - in Excel format
• Do Revenue Estimates
Cash Flow - in Excel format
• Input Budget Forms
The Budget Process
Title 7, Chapter 6, Part 40
The Local Government Budget Act
Completely Rewritten in 2001
Applies to all local governments
7-6-4002
Definitions
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Governing Body
Local Government
Municipality
Working Capital
(Available Cash?)
– (+) Current Assets (Cash + Receivables?)
– (-) Current Liabilities
– (-) Reserves
7-6-4002
Working Capital - Reserves
• General Fund, Cash Flow Reserve allowed
– MCA, 7-6-4034
– 50% of Appropriations / Expenditures
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Enterprise Cash Flow – typically 1.5 months
Debt Service Reserves
Discretionary Reserves – Capital, etc.
Special Revenue Fund Balances = Reserves
Other
7-6-4003
Budget & Levies to DOA
• By October 1st OR 60 days after Tax Values
• On Department of Administration (DOA) forms
OR on Acceptable Alternative Budget Format
DOA Forms
Internet: mt.gov/LGSB
(local government services bureau)
Accounting and Financial Reporting
Section Documents
7-6-4004
Budget fund structure
• “BARS”
– Budget Accounting and Reporting System
– Department of Administration (DOA)
– Local Government Services Bureau
• How many want a brief overview of
fund accounting ??
7-6-4005
Expenditures Limited to Appropriations
• 7-6-4033 – Expenditure Limitation
– OK to under spend 
• This does not apply to revenue budgets
– Over/Under collection of revenues not limited
– Revenue budgets do not need to be amended
MCA 7-6-4006
Appropriation power -- requirements.
1. Council may appropriate
2. Use of Appropriations limited to Working
Capital
• Fund and Appropriate before spending
3. Amendment by Authorized Procedures
4. Council Action to Amend Budgets
7-6-4006
continued
3. Amendment by Authorized Procedures
a. Debt payments
b. Trust Funds
c. Grants
(budget the $$ match)
d. Special Assessments
e. Sale of Land
f.
Gifts or Donations
g. Debt Borrowed
7-6-4011
Use of bond proceeds and borrowed money
MCA 7-6-4007 thru 4010 Reserved
• Automatic budget amendment for Bonds
which are authorized by
– election or
– the council (revenue bonds, lease purchase)
7-6-4012
Fee based budgets - adjustable appropriation
• In the annual budget resolution
• fee based budget amendments may be
authorized
• For any proprietary and specially identified
fee based appropriations
7-6-4013
Fees for services - hearing and resolution
• Must be reasonable and
• related to the cost of providing the service.
• Municipal rate hearing required -- notice.
– 69-7-111
– 69-7-112
– 7-1-4127
– 7-1-4129
Utility rate hearing notice
Utility rate hearing
Publication of notice
Mailing of notice
69-7-111 Utility rate hearing notice
• Notice Published per 7-1-4127, except:
– publish 3 times
– 1st notice no more than 28 days prior to hearing
– 3rd notice no less than 3 days prior to hearing
• Also – Notice Mailed
– to all customers
– no more than 30 days and no less than 7 days
prior to public hearing
69-7-112
Utility rate hearing
• Conduct of municipal rate hearing
• Rates effective 10 days after decision/filing
7-1-4127 Publication of Notice
• Notice must be
– published twice,
– with 6 days between notices.
• Utility Rates must obey 69-7-111 & 7-1-4127
7-1-4129 Mailing of Notice
7-6-4014
Restriction on tax-financed
expenditures if voter approval
required.
• Can't spend in anticipation of approval of
expenditure requiring voter approval.
• Voter approved levies see: 15-10-420 & 425
• 7-6-4015
Payments for Judgments
• 7-6-4016 thru 7-6-4019 Reserved
7-6-4020
Preliminary annual operating budget
1.
2.
3.
4.
5.
Must be prepared -- No “Approval” of Prelim
County officials
County - by June 1 notify - components required
Preliminary Budget - Minimum Content
Estimated amount to be raised by property
taxes
7-6-4020 part 3 continued
Preliminary Budget – Minimum Content
a.
b.
c.
d.
3 Year list of sources - Prior, Current, Proposed
3 Year list of expenditures
Projection of changes in cash balances
List both proposed capital expenditures and capital
projects
e. Debt Obligations data
f. Personnel Schedules - listing not required in budget
document
g. Other estimates for the budget
7-6-4020 part 3 continued
b. 3 Year list of expenditures
i.
ii.
iii.
iv.
v.
1 - Prior, 2 - Current, 3 - Proposed
salaries & wages
operations & maintenance
capital outlay **
debt service
transfers out
** FY13 CCIP Fire Example
Example in Excel Format
7-6-4020 part 3 continued
c. Projection of changes in cash balances
Start with
Add
Deduct
Beginning balance
Estimated Revenue
Proposed Expenditures
(note: year end carryovers)
Deduct
Equals
Proposed/Required Cash Reserves
Estimated Ending Balance
Statement of Balances and Changes
Example in Excel Format
7-6-4021 Notice of
preliminary or amended budget
1. Budget Hearing – content
a.
b.
c.
d.
State preliminary or intent to amend
On file, open for inspection
date, time, place of meeting (hearing)
taxpayer or resident may appear and be heard
2. Publication per 7-1-4127
• 7-6-4022
District court budgets
• 7-6-4023
Repealed
(State grants to District Courts – rules)
7-6-4024
Hearing on preliminary budget
1. Hold hearing per notice
2. Officials to attend to answer questions
3. Hearing may be continued from day to day
a. approve and adopt by resolution
b. by 2nd Monday in August or within 30 days of
DOR tax values
• 7-6-4025 Receipt and expenditure of money
prior to adoption of final budget.
– provides authority due to budget adoption
deadlines
• 7-6-4026 thru 7-6-4029 Reserved
15-10-420
Budgeting Increase of tax revenue
Before Budgeting Increased Tax Revenue
1. Public Hearing on intent to increase TAX
REVENUE
a. Includes inflation allowed under 15-10-420
b. Excludes tax revenue from new growth
c. May hold hearing in conjunction with budget hearing
2. Special advertisement -- wording of notice -- 71-4127
Tax Increase Resolution Example
in Word Format
7-6-4030
Final budget - resolution - appropriations
1. May amend preliminary - hearing &
comments
2. Must be balanced
3. Final Resolution - establish legal spending
limits (what level? Fund? Line Item?)
4. Effective date of Resolution is July 1st regardless of adoption date
Annual Budget Resolution Example
in Word Format
In-House Administrative Budgeting
Subfunds - Project Accounting
• Supplemental record keeping.
• Project Accts = Supplemental
• Official “Master” Budget (Legal Limits)
– Administratively create to subfunds/projects
– Total of Subfunds/Projects = Master Budgets
• No “Formal” Budget Amendments
7-6-4131
Budget amendment procedures
1. Resolution may delegate authority to transfer
appropriations within same fund
2. Amend as provided in 7-6-4006 or 7-6-4012
3. Public Hearing to amend budget - EXCEPT as
provided in 7-6-4006, 7-6-4011, 7-6-4012, 76-4015, 7-6-4032
7-6-4131
Budget amendment procedures
2. Amend as provided in:
7-6-4006, Appropriation power -- requirements,
amendment process
7-6-4012, Fee Based Budgets (if authorized)
7-6-4131
Budget amendment procedures
3. Amend as provided in:
7-6-4006, Appropriation power -- requirements,
amendment process
7-6-4011, Bond Proceeds
7-6-4012, Fee Based Budgets (if authorized)
7-6-4015, Judgements
7-6-4032, Emergency expenditures
7-6-4032
Emergency expenditures.
• Requires approval by 2/3rds of governing
body
7-6-4033
Expenditures limitation
• Limited to annual appropriation limit
• Exceptions as outlined in 7-6-4031(3)
• Limited by classifications in 7-6-4030(3)
– Legal spending limit set by Council
7-6-4034
Determination of fund requirements
-- property tax levy.
1. Tax Levy Needs Formula
a. + Appropriations / Expenditures
b. + Cash Flow Reserve needs
c. - Working Capital
d. - Estimated Revenue (excluding tax levy)
2. Reserve allowed = 50% of Appropriations /
Expenditures (excluding election &
emergency)
7-6-4035
Tax levies for boards and commissions
-- bond exemption.
• City Commission approval required for all tax
levies
• Subject to 15-10-420
• Exceptions:
– Port Authority
– Legally pledged payment of debt
– Operations of a “Regional Resource Authority”
7-6-4036
Fixing tax levy
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by 2nd Monday in August
or with 30 days after DOR tax values
after Tax Increase hearing under 15-10-203
after Final Budget Adoption
All Levies Subject to 15-10-420
Annual Tax Levy Resolution Example
in Word Format