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.
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