Budget and Finance City of Salida, CO May 27, 2015 (updated slides - - PowerPoint PPT Presentation

Colorado Local Government Budget and Finance

City of Salida, CO May 27, 2015 (updated slides Jun. 15)

Introduction

• DOLA includes four Divisions
• Division of Local Government Programs

DOLA wants to be a partner with local governments to Strengthen Colorado Communities where we all live! Board of Assessment Appeals

• Hears appeals filed by real and personal

property owners regarding the valuation placed on their property.

Division of Property Taxation

• Coordinates and administers the

implementation of property tax law throughout the 64 counties.

Division of Housing

• Works through programs to improve the

access of all Coloradans to decent, affordable housing.

Division of Local Government

• Provide technical, financial assistance

and information to local governments, the Governor and the Legislature.



Budget, Financial and Administrative Assistance



Local Government document filing and retention



Special District Election Assistance



Financial and legislative analysis on local government issues



Mineral Impact and Gaming Funding and Grant Programs



Federal CDBG and CSBG Grant Programs



Conservation Trust Fund and Volunteer Firefighter Pension Distributions

Why is Government Finance Important?

Important questions to think of:

• Where does the money come from?
• Where does the money go?
• What “funds” does my government have –

and why?

• What restrictions exist on the various

funds?

• What plan do we have currently and for

future financial stability?

‘The first and most important step toward public financial literacy is to “know what you don’t know.”’ “Public finance can be daunting and arcane – and it’s never been more important for officials to understand it.” – Governing, Feb ‘14

Budget vs. Audit

• Budgets are forward looking, planning documents – what is the plan for

the next fiscal year (or two?).

• Audits are formal evaluations of the previous fiscal year’s activities after

the year has ended (what actually happened last year?).

• One very important difference between the budget and the audit is the

general audience for each.

– The budget is developed for general audiences with very broad permission to each government board on how it is developed (limited budget document requirements are at C.R.S. 29-1-101 et seq). – An audit, while also being a public document, its formatted and designed primarily for financial analysts to allow measurement of financial conditions for bond investment analysis, credit worthiness and other financial evaluations. The format requirements of audits are prescribed by the Governmental Accounting Standards Board (GASB).

• Budget-to-Actual Reports provide a “current” review of financial

activities compared against the budget plan (generally a monthly or quarterly evaluation).

Budget Requirements

• Colorado Revised Statutes prescribes some basic format requirements for local

government budgets

• Proposed Expenditures and Anticipated Revenues
• Beginning and Ending Fund Balances
• Three Years of Data (e.g. 2013, 2014, and 2015)
• Written Budget Message
• No Deficit Spending
• Lease Purchase Supplement
• What other items might be included?
• Goals/Priorities
• Department Summaries
• Authorities, Improvement Districts or other LG Units
• Community Profile
• Mill Levy Certifications
• Anything else Staff or Council desires
• Capital Plans
• Resolutions/Ordinances

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

• Local government fiscal years are on a Calendar basis (Jan. 1 – Dec. 31)

All local governments must make their own calendar, to ensure items are addressed along the way!

Fund Accounting – Why?

• Funds are officially established (by statute, resolution, ordinance or
• therwise) segregated accountings for a specific sub-section of revenue

and expenses.

• Local governments use fund accounting to allow for identification of

different revenues and expenditures which are collected and spent for particular purposes. (sometimes called the “color of money”)

• Most municipal governments have at least a general fund and a

“conservation trust fund”, but many have more (Salida’s include the SteamPlant Enterprise and Water Activity Enterprise as well).

• Segregated Funds allow governments to make sure

they are using dollars for their intended purposes. Limiting inadvertent , inadvisable or otherwise illegal use of designated dollars.

Revenues

• Plainly stated, “Revenue” is any source of funding received by a local
• government. Sources can include taxes, fees, forfeitures,

intergovernmental transfers, gifts, and others.

• Revenue can be restricted for a particular purpose in various ways. For

example – Conservation Trust Funds (CTF) can only be used for Park and Recreation operations. Or a gift can be provided to a government to be used for one particular purpose

• All local governments have different

mix of revenues depending on their local conditions which make an overall picture

• f how services are provided in that area.

Revenue Comparison

50%

10%

9% 9%

3%

3% 3% 3% 3%

3% 2%

1% 1%

0% 0% 2012 Statewide Aggregate General Fund Revenues

Sales & Use Tax Charges for Service Property Tax All Other Intgovt Licenses Franchise Tax Misc Revenue Other Tax Highway User Tax Transfers In Fines and Forfeits Conservation Trust S.O. Tax Occupation Add MV Fees Cigarette Tax

70%

6%

0% 11%

0%

4% 2% 3% 2%

0% 1%

1% 0%

0% 0%

2015 Salida General Fund Revenues

Sales & Use Tax Charges for Service Property Tax All Other Intgovt Licenses Franchise Tax Misc Revenue Other Tax Highway User Tax Transfers In Fines and Forfeits Conservation Trust S.O. Tax Occupation Add MV Fees Cigarette Tax Unclassified Social Services

44%

11%

11% 10%

3%

2% 3% 10% 2%

1% 1%

0% 1%

0% 0% 2012 Pop 4,500 - 6,500 General Fund Revenues

Sales & Use Tax Charges for Service Property Tax All Other Intgovt Licenses Franchise Tax Misc Revenue Other Tax Highway User Tax Transfers In Fines and Forfeits Conservation Trust S.O. Tax Occupation Add MV Fees Cigarette Tax

73% 4% 11% 2% 0% 2% 1% 0% 4% 0% 0% 1% 1% 0% 0%

2012 Buena Vista General Fund Revenues

Sales & Use Tax Charges for Service Property Tax All Other Intgovt Licenses Franchise Tax Misc Revenue Other Tax Highway User Tax Transfers In Fines and Forfeits Conservation Trust S.O. Tax Occupation Add MV Fees Cigarette Tax Unclassified

67% 0% 7% 8% 3% 5% 1% 0% 8% 0% 0% 1% 1% 0% 0%

2012 Poncha Springs General Fund Revenues

Sales & Use Tax Charges for Service Property Tax All Other Intgovt Licenses Franchise Tax Misc Revenue Other Tax Highway User Tax Transfers In Fines and Forfeits Conservation Trust S.O. Tax Occupation Add MV Fees Cigarette Tax Unclassified Social Services

Revenue 2015 Adopted vs. Amended

Revenue 2015

Source Adopted Amended Sales & Use Tax $5,896,600 $6,152,900 All Other Intgovt $923,900 $1,531,500 Charges for Service $510,600 $599,600 Franchise Tax $313,400 $313,400 Other Tax $240,000 $240,000 Highway User Tax $199,900 $199,900 Misc Revenue $178,700 $245,200 Fines and Forfeits $75,000 $75,000 Conservation Trust $50,000 $50,000 Add MV Fees $25,000 $25,000 Cigarette Tax $22,000 $22,000 Licenses $20,000 $20,000 Property Tax $0 $0 S.O. Tax $0 $0 Occupation $0 $0 Unclassified $0 $0 Social Services $0 $0 Transfers In $0 $0 TOTAL REVENUE $8,455,100 $9,474,500

70%

11%

6% 4%

3%

2% 2% 1% 1%

0% 0%

0% 0%

0% 0% 2015 Adopted Salida General Fund Revenues

Sales & Use Tax All Other Intgovt Charges for Service Franchise Tax Other Tax Highway User Tax Misc Revenue Fines and Forfeits Conservation Trust Add MV Fees Cigarette Tax Licenses Property Tax S.O. Tax Occupation Unclassified Social Services Transfers In

65%

16%

6% 3%

3%

2% 3% 1% 1%

0% 0%

0% 0%

0% 0% 2015 Amended Salida General Fund Revenues

Sales & Use Tax All Other Intgovt Charges for Service Franchise Tax Other Tax Highway User Tax Misc Revenue Fines and Forfeits Conservation Trust Add MV Fees Cigarette Tax Licenses Property Tax S.O. Tax Occupation Unclassified Social Services Transfers In

Salida’s Revenues

2007 2008 2009 2010 2011 2012 2013 2014 Estimated 2015 Adopted

City of Salida

Grants Taxes Charges/Fines/Permits Integovernmental Miscellaneous

General Government Revenues

Amended Budget Resolutions 2015-16 & 2015-30 Amended Grant Revenue

Audited 2015 Adopted 2015 Amended

Salida Sales Tax Flow

Why is sales tax important?

• For Salida (and other

recreation centric local governments) sales tax makes up the largest portion of revenue by a very large margin.

• Salida does not have a

property tax, which was a conscious decision made by the board and voters in 2008.

• As we can observe from 2009,

sales tax can be volatile, so constant tracking, conservative revenue estimation, and identification

• f drivers is always important.

35% - Capital Improvement Reserve 9% - Capital Expenditure Reserve 1% - Economic Development Reserve 8% - Contingency Reserve (Max 15% Ops.) 47% - Unrestricted

Salida Code 4-3-50 (a) 2.0% Salida Code 4-3-50 (b) 1.0%

75% or more for (1)(A) - Replace, repair or improve Streets, water or sewer lines under streets. (1)(B) - Replace, repair, improve or install sidewalks, curb, gutter, or storm drainage. 25% or other remainder (2) – maintenance upkeep of items allowed in part (1) Distributed between the County and Municipalities based on Motor Vehicle Registrations (2013 MVR)

• Chaffee County – 11,430 (54.42%)
• Buena Vista – 3,110 (14.81%)
• Poncha Springs – 945 (4.5%)
• Salida – 5,519 (26.28%)

Expenditures

• Expenditures are any item a local government spends money on. Commonly

these include a variety of purposes for all of the services a municipality provides.

• The largest expenditures for most governments tend to be some aspect of

salary and benefits. These costs are ever increasing for the service industry employers of which government tends to be a big part of.

• Capital investment in infrastructure is also a large part of many budgets,

and can fluctuate wildly depending on the issuance of bonds, investment in large projects, and continual funding of depreciation.

• Identifying drivers to expenditure costs and projecting such items forward is

an essential part in providing for conservative but accurate expenditure projections through budget development, continual budget management, and finally through reporting in annual financial statements.

Expenditure Comparison

20% 17% 16% 13%

9%

7% 6% 4% 3%

2% 1%

1% 1%

2012 Statewide Aggregate General Fund Expenditures

Police Gen Govt Expenses Capital Outlay Recreation Streets Fire Debt Service Gen Transfers Out Misc Expense Other Public Safety Solid Waste Judicial Health Other Public Works Social Services

15% 17% 24% 15%

9%

3% 5% 5% 3%

3% 1%

0% 0%

2015 Pop 4,500 - 6,500 General Fund Expenditures

Police Gen Govt Expenses Capital Outlay Recreation Streets Fire Debt Service Gen Transfers Out Misc Expense Other Public Safety Solid Waste Judicial Health Other Public Works Social Services

18% 12% 37% 12%

8%

11% 2% 0% 0%

0% 0%

0% 0%

2015 Salida General Fund Expenditures

Police Gen Govt Expenses Capital Outlay Recreation Streets Fire Debt Service Gen Transfers Out Misc Expense Other Public Safety Solid Waste Judicial Health Other Public Works Social Services

22% 22% 23% 7% 16% 2% 0% 6% 0% 0% 0% 2% 0%

2012 Buena Vista General Fund Expenditures

Police Gen Govt Expenses Capital Outlay Recreation Streets Fire Debt Service Gen Transfers Out Misc Expense Other Public Safety Solid Waste Judicial Health Other Public Works Social Services

0% 42% 30% 0% 28% 0% 0% 0% 0% 0% 0% 0% 0%

2012 Poncha Springs General Fund Expenditures

Police Gen Govt Expenses Capital Outlay Recreation Streets Fire Debt Service Gen Transfers Out Misc Expense Other Public Safety Solid Waste Judicial Health Other Public Works Social Services

Expenditures 2015 Adopted vs. Amended

Expenditures 2015

Expense Adopted Amended Capital Outlay $3,204,900 $4,309,000 Police $1,604,000 $1,629,300 Recreation $1,053,000 $884,200 Gen Govt Expenses $1,009,000 $1,016,000 Fire $955,500 $939,000 Streets $742,200 $516,400 Judicial $0 $0 Other Public Safety $0 $0 Solid Waste $0 $0 Other Public Works $0 $138,800 Health $0 $0 Social Services $0 $0 Misc Expense $0 $132,200 Debt Service Gen $161,900 $161,900 Transfers Out $0 $158,500 TOTAL EXPENDITURES $8,730,500 $9,885,300

37% 18% 12% 12%

11%

8% 0% 0% 0%

0% 0%

0% 0%

2015 Adopted Salida General Fund Expenditures

Capital Outlay Police Recreation Gen Govt Expenses Fire Streets Judicial Other Public Safety Solid Waste Other Public Works Health Social Services Misc Expense Debt Service Gen Transfers Out

44% 16% 9% 10%

10%

5% 0% 0% 0%

1% 0%

0% 1%

2015 Salida General Fund Expenditures

Capital Outlay Police Recreation Gen Govt Expenses Fire Streets Judicial Other Public Safety Solid Waste Other Public Works Health Social Services Misc Expense Debt Service Gen Transfers Out

Salida’s Expenditures

2007 2008 2009 2010 2011 2012 2013 2014 Estimated 2015 Adopted

City of Salida

Capital Outlay General Government Public Safety Public Works Recreation Debt Service

General Government Expenditures

Amended Capital Outlay + $1,104,100

Recreation Expenses $ - 168,800

• Pub. Works

Expenses $ - 87,000 Audited 2015 Adopted 2015 Amended

Operations and Capital

Capital Expenses

The capital budget is for large, long term projects that are not regular expenses.

 Large Projects  Land Acquisition  Facilities/Buildings  Large Equipment Purchase  5 to 10 year Planning Horizon

Operating Expenses

The operating portion is developed to provide for ongoing operations of your municipality.

 Salaries  Maintenance  Supplies  Other

Capital Expenditures

What is a “capital” expense?

• Broadly a capital expense is any spending to purchase, build or otherwise

develop a “capital asset” as the term is used for financial reporting.

• “Capital assets” are items that are not consumed or used up in the year it is
• purchased. is why in many cases you see both a minimum dollar value as well

as a useful life timeframe to evaluate

• Salida has defined “capital” by Resolution 2004-04:

– Items costing at least $5,000 with a useful life of at least 3 years.

• Many local governments find flexibility thorough grants and other

intergovernmental sources to make one time, capital investments, but balancing capital with the ongoing costs of operations and maintenance of new or existing facilities and assets is a challenge most local governments face.

Enterprises

• Enterprise operations are “government owned businesses” which operate

predominantly on a fee-for-service model.

• The TABOR amendment passed in 1992 further defined “enterprise” for its

purposes to be such fee-for-service operations which receive less than 10% support from general governmental sources (tax authority, state grants, etc).

• Local governments across the state operate these activities under both

concepts, for different reasons which depend on legal status, accounting method used, if ballot questions have been passed and other considerations.

• Evaluating enterprises regularly to determine if/what fees are paying for

as opposed to what support such funds may be receiving from other sources (general fund, intergovernmental transfers, etc) may be important for their TABOR status, the status of other legal requirements, and broadly just to understand how services are being funded.

Colorado Specific Financial Limits

Revenue Sources

– Sales Tax – Charges for Services – Intergovernmental – Property Tax

TABOR Limitations

– Fiscal Year Spending Limit – Property Tax Revenue Limit – Mill Levy Increase Limitation – Debt Limitation – 3% Emergency Reserve

5.5% Property Tax Revenue Limit

– Administered by DLG, limits property tax revenue to 5.5% + growth each year.

Gallagher Amendment

– Limits amount of residential value for property taxing purposes (45% Residential - 55% Commercial)

Other Local Concerns

− Local governments in many cases have enacted their own voter approved limitations (both above and below other general limits and on specific revenue sources compared to others) − Knowing your local situation, and being advised on how it works for your local government is important.

Sustainable vs Balanced Budgets

Balanced budgets are required from year to year and may be achieved through the use

• f one-time solutions such as fund balance use, budget gimmicks, or other methods. A

sustainable budget is one where one time costs are tied to one time revenue, and alternatively sustainable long term revenues cover ongoing expenses.

2007 2008 2009 2010 2011 2012 2013 2014 Estimated 2015 Adopted

City of Salida

General Revenue General Expenditures Capital Grants Capital Expenditures

General Government Revenues and Expenditures Analysis

Audited 2015 Adopted 2015 Amended Increased Revenue $764,700 Increased Capital Exp. $1,399,100 Increased Grants $580,000

Resources

DOLA – www.dola.colorado.gov/budgets Other Local Government Budget and Financial Information

• www.dola.colorado.gov/lgis

City of Salida – www.cityofsalida.com Government Finance Officers Association (GFOA) – www.gfoa.org

Best Practices - www.gfoa.org/best-practices Capital Budgeting - www.gfoa.org/topic-areas/capital-budgeting Capital Planning Policies - www.gfoa.org/capital-planning-policies

Governmental Accounting Standards Board (GASB) – www.gasb.org Colorado Government Finance Officers Association (CGFOA)

www.cgfoa.org

National Advisory Council on State and Local Budgeting Practice

http://gfoa.org/services/nacslb

Questions

Jarrod Biggs

Local Government Analyst P- 303.864.7744 1313 Sherman St. Rm. 521, Denver, CO 80203 jarrod.biggs@state.co.us | dola.colorado.gov/dlg

http://goo.gl/forms/C3SjfUBU3v