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HomeMy WebLinkAbout03. Draft Budget Development and Operations Policy 1 SUBJECT: BUDGET DEVELOPMENT POLICY General: The process for the publication and legislative consideration of the annual budget for the City of Oshkosh is stated in Wisconsin Statutes (sections 62.12 and 65.90). Those legislative pronouncements provide the overall framework and minimum legal requirements for the City budget process. This policy outlines the process to be followed by City staff and the City Council in developing and presenting the annual operating and capital budgets for all City operations, including utilities for review and adoption. The objectives of this policy are to provide guidance to the City Council and City staff with respect to the annual budgets for City operations, particularly with respect to balanced operating budgets. As the City must live within its means, a balance must be struck between funding sources for operations and expenditures so that the public can realize the benefits of a strong and stable government. Budget structural balance, where a balance is maintained between operating revenues and operating expenditures over the long-term, is a goal of this policy. Due to certain circumstances, an annual operating budget may be adopted in which revenues and expenditures do not equal; however, the trend over the longer term (e.g., 3-5 years) should achieve structural balance. Recommendation: It is recommended by the Government Financial Officers Association (GFOA) and the National Advisory Council on State and Local Budgeting (NACSLB) that local municipalities strive to include five (5) key characteristics in the budget process: 1. Incorporates a long-term perspective 2. Establishes linkages to broad organizational goals 3. Focuses budget decisions on results and outcomes 4. Involves and promotes effective communication with the public 5. Provides incentives to government management and employees Procedures: 1. The annual budget for the City developed for presentation to the City Council will include all operations of the City, including utilities, and will include both the operating budget for the ensuing fiscal year and a capital budget based upon a ten-year capital improvement plan. Councils, committees, or commissions (e.g., Library Board, Parks Advisory Committee, Bike and Pedestrian Committee, Museum) should review such budgets with the applicable department head before presentation to the City Council and preferably before the annual budget is finalized. 2. Before commencement of the annual budget process, the Finance Director, in consultation with the City Manager, will develop recommended budget parameters and the budget calendar. Budget parameters will include allowable increases in operating budgets, projected wage increases, targets for borrowing in accordance with the City’s debt management policy, anticipated changes in revenue sources or tax base growth, and other factors. 3. The Budget Calendar Shall allow adequate time for Committee input. The calendar should also allow for the possibility of five Council workshops; one towards the end of June to review Capital projects, one toward the end of August to discuss early projections and 2 priorities from Council, two all day sessions in October to review the Recommended Budget, and a final workshop may be scheduled after the public hearing. If applicable, staff will distribute Budget Calendars to Committee who review budget submittals. 4. Certain elements of budgets that are common across departments will be calculated and/or monitored on a centralized basis to ensure comparability and budgetary control. These areas, including the authority responsible for oversight, include:  Salaries and benefits – Finance Director 5. The Finance Director is responsible for coordination and initial review of department budget submissions. Following initial review, the Finance Director will work with the City Manager to develop a budget. Meetings will be held with departments to review their budget requests prior to finalizing the budget. 6. Budget requests should be consistent with the City’s adopted Strategic Plan. 7. The budget, consisting of the Manager’s recommendations on department requests, shall be submitted to the City Council for its consideration. Along with the executive budget submission, the following information will be reported to the City Council. A report from the City Manager as to whether the budget falls within the initial parameters established by the City Council and areas in which changes/adjustments could be considered. 8. Any new program or request for additional positions need to be submitted to the City Manager is the form of a “Budget Enhancement”. Budget Enhancements will be presented to the City Council for consideration separately from the recommended Budget. 9. City Council deliberations on the budget will include consideration of the budget, and department head consultation as determined by the Council. The annual operating and capital budgets will be submitted to the City Council for adoption as provided in the City Code and Wisconsin Statutes. 10. The City Council will hold the statutory public hearing in early November. Prior to the Public Hearing, The City Manager will provide ample public notice of the recommended budget and public hearing. 11. The City shall annually adopt a balanced budget for the General Fund where operating revenues and other funding sources are equal to, or exceed, operating expenditures. Funding sources that can be considered in adhering to this provision include that portion of General Fund balance in excess of the minimum, per the City’s fund balance policy, that may be budgeted to reduce the ensuing year’s tax levy. Any increase in expenditures, decrease in revenues, or combination of the two that would result in a budget imbalance during the current fiscal year will be reported to the City Council, of budget revisions or use of fund balance reserves to support ongoing operations. Any year-end operating surpluses will revert to unreserved fund balance for use in maintaining reserve levels set by policy. 12. Enterprise funds shall be supported by their own rates and specified revenue sources, including property taxes as deemed appropriate by the City Council, and not be subsidized by the General Fund. Enterprise funds will pay their share of overhead 3 services provided by General Fund departments. Enterprise fund operating surpluses will not be used to subsidize other City funds. 13. Sufficient charges shall be levied to operating departments to support activities accounted for in the Internal Service Fund. No trend (3-5 years) of operating deficits in the Internal Service Fund shall be allowed. 14. The operating budget shall serve as the annual financial plan for the City and as the policy document for implementing Council goals and objectives outlined in the City’s strategic plan. The budget shall provide staff the resources necessary to accomplish City Council determined service levels. The City’s annual budget document will be presented by department, with a logical breakdown of programs and line-item detail. Separate summary budget information will also be presented for discussion and review by the City Council and the public. A future goal, if practical, may include in the annual budget document measures of workload, efficiency, and effectiveness. 15. The City Council exercises legal budgetary control at the fund level, however reports functional and departmental levels as defined in the City budget document. Budget accountability rests primarily with the operating departments of the City, with oversight by the City Manager.