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Municipal Budget & Finance 101. GFOAz Annual Conference 2003 Doug Sandstrom, City of Surprise Byron Smith, League of Arizona Cities and Towns. Revenue Sources. Intergovernmental (State Shared Revenue) Local Taxes Sales (TPT) Property User Fees. Category

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municipal budget finance 101

Municipal Budget & Finance 101

GFOAz Annual Conference 2003

Doug Sandstrom, City of Surprise

Byron Smith, League of Arizona Cities and Towns

revenue sources
Revenue Sources
  • Intergovernmental (State Shared Revenue)
  • Local Taxes
    • Sales (TPT)
    • Property
  • User Fees
state shared revenues general
Category

Urban Revenue Sharing (Income Tax)

14.8% of 2 Years Prior

Population Distribution

General Government Purposes

$365,065,000

History

1972 Initiative

Preempted from Local Income and Luxury Tax

15% Originally

Has Fluctuated Over Time

State Shared Revenues-General
state shared revenues general4
Category

Sales Tax

25% of Distribution Base

Population Distribution

General Government Purposes

$318,000,000

History

1942 Initiative

1960 Initiative

Increased Share

State Shared Revenues-General
state shared revenues general5
Category

Highway User Revenue Fund (HURF)

27.5%

Population and County of Origin of Gas Sales Distribution

Restricted to Streets and Roads

$294,000,000

History

1946 Initiative

Originally just Gas Tax

Now Includes Other Transportation Related Fees

State Shared Revenues-General
state shared revenues general6
Category

Vehicle License Tax

About 20% of VLT

Population Distribution within Counties

General Government Purposes

$140,000,000

History

Evolved from Personal Property Tax on Vehicles

State Shared Revenues-General
state shared revenues general7
Category

Local Transportation Assistance Fund (LTAF)

First $23 million after operating costs are met

Population Distribution

Restricted to Transportation/Transit

History

First in Line after it Passed

State Shared Revenues-General
state shared revenues local
State Shared Revenues-Local
  • City of Surprise
    • 14% of general fund operating budget
      • Not dedicated to any particular activity
    • HURF funds are used exclusively for street maintenance operations
      • General fund subsidizes 24% of total streets budget
    • LTAF
      • Entire amount funds our Transit division
      • Dial-a-Ride
      • Must live within this allocation
local revenues sales tax
Local Revenues – Sales Tax
  • Model City Tax Code
    • Established in 1987 after attempt to preempt local sales tax authority
    • Brought uniformity with continued local control but with options and green pages
  • Only 1 of 5 states that have this much authority over the tax base.
  • National effort to Streamline
local revenues sales tax10
Local Revenues – Sales Tax
  • Sales Tax
    • 51% of general fund operating budget
    • Several Components
      • Retail
      • Restaurant & Bar
      • Hotel/Motel
      • Construction – Onetime Revenue
    • Attempt to maximize ongoing components
local revenues fees
Permits & Fees

16% of total General Fund Revenue

Cost recovery (including overhead)

User fees

Pay to Play

Only participants pay

Cost recovery Philosophy

1% of general fund revenue

Political Implications

Local Revenues - Fees
local revenues utility fees
Local Revenues – Utility Fees
  • Utility Fees
    • Business like activities
    • Type of User Fee
    • Each activity should be self supporting
      • Sewer
      • Water
      • Replenishment
      • Sanitation
    • Political Implications
      • City of Surprise 3-Year Ramp-up
local revenues property tax
Local Revenues - Property Tax
  • Primary & Secondary
    • Primary may be used for any general government purpose
    • Secondary is directly tied to debt service
    • Both Require Voter Approval
    • Primary has 2% increase over maximum levy
  • Truth-in-Taxation
    • Notification
    • Based on Levy not Rate
local revenues property tax17
Local Revenues – Property Tax
  • Must be adopted on or before the 3rd Monday in August
    • At least 7-days after final budget
    • Requires a Public Hearing
  • Truth-in-Taxation
    • Must be published twice in a local newspaper
      • 1st Publication 14 – 20 Days
      • 2nd Publication 7 – 10 Days
    • Requires Roll Call vote of the council
    • Requires a Public Hearing
local revenues property tax19
Local Revenues – Property Tax
  • 6% of City of Surprise General Fund operating revenues
state imposed expenditure limitation
State Imposed Expenditure Limitation
  • 1979-80 Base limit adjusted annually
    • Population and Inflation
    • Uniform Expenditure Reporting System
    • Penalties for Non-Compliance
  • Why 1979-80?
    • Prop 13 in California
  • City of Surprise – FY2003 Budget
    • State Limit $ 11,657,725
    • Adopted Budget $141,175,000
alternative expenditure limitations
Alternative Expenditure Limitations
  • Home Rule aka Alternative Expenditure Limitation (AEL)
  • Permanent Base Adjustment
  • Capital Projects Accumulation Fund
  • One-Time Override
  • Similar process for all
    • Detailed and Summary Analysis
    • Submission to Auditor General, etc.
  • Don’t fail unless other political turmoil exists
city of surprise
City of Surprise
  • Home Rule Election on March 11, 2003
  • Passage of an Alternative Expenditure limitation is imperative
  • Process
    • Publicity pamphlet
    • Neighborhood Meetings/HOA’s
    • City Council District Meetings
    • Council as Spokespeople
  • Education is key
cos permanent base adjustment
COS – Permanent Base Adjustment
  • Intend to Pursue PBA in 2005
  • Mid-point of 4-year Home Rule
  • Fail safe
budget tax levy
Budget/Tax Levy
  • Process/calendar determined locally
  • State Budget Forms
    • Provided by Auditor General
  • Tentative Budget must be adopted by the 3rd Monday in July
    • Can’t go above this adopted amount in Final
  • Final Budget Adoption
    • 2nd Monday in August if Property Tax
    • No Specific Date if No Property Tax
  • Adoption can be by simple motion
surprise fy2004 budget calendar
Surprise – FY2004 Budget Calendar
  • October 29 CIP Kick-off
  • December 13 CIP Projects Due
  • December 18 Budget Kick-off
  • February 14 All Budget Requests Due
  • March 17 – 21 Management Team Budget Reviews
  • April 16 Tentative Budget presented to City Manager
  • May Council Retreat
  • June 12 Tentative Budget Adopted
other
Other
  • Accounting
    • No expenditure may be made that is not authorized in the budget
    • May not exceed amounts indicated in final budget
    • Budget transfers that do not change the bottom line
  • Audits
    • Required Annually for Cities (Bi-annually for Towns)
    • Outside CPA or Licensed Public Accountant
    • Filed with Auditor General by October 31
      • 120 day extension available
other31
Other
  • Bonding
    • General Obligation
      • Voter Approval Required
    • Revenue
      • Voter Approval Required
    • Non-Profit Corporation
      • MPC – Generally Revenue Producing projects
      • No Voter Approval
  • Investments
    • Deposits in Excess of $100,000
    • Local Government Investment Pool (LGIP)
federal requirements
Federal Requirements
  • Single Audit
    • Required on federal grants if more than $300,000 is received in a given year
    • Generally contract with current Auditor
  • Davis-Bacon Act
    • All projects utilizing 25% or more federal funds must pay prevailing wages
purchasing
Purchasing
  • Bidding Requirements
    • General Projects - $16,565 (Labor Only)
    • Street Projects - $177,487 (Total Cost)
    • Recreational Projects - $153,189 (Total Cost)
    • Sale of Real or Personal Property
  • Professional Service Alternatives
    • Design/Build
    • Architects
    • Engineers
dates to remember
Dates to remember
  • Specific Dates are listed in the League Book
    • Budget Adoption
    • Tax Levy Adoption
    • Truth-in-Taxation
    • Audit Filing
    • Public Notices
municipal budget finance 10135

Municipal Budget & Finance 101

GFOAz Annual Conference 2003

Doug Sandstrom, City of Surprise

Byron Smith, League of Arizona Cities and Towns