Budget Process and Policies


The City Manager and Finance/Accounting Supervisor holds the financial planning responsibility or the City including the operating budget, capital improvement plan, and the allocation of financial resources to accomplish the City's goals and objectives. Fiscal policies and procedures are established to insure the City's financial management framework. The adopted budget is prepared in accordance with the Truth in Millage (TRIM) requirements as promulgated by the Department of Revenue. In addition, generally accepted accounting principles (GAAP) for state and local governments as set forth by the governmental accounting standards board (GASB), provide standards which guide public financial management and reporting.



Process


Fiscal Year
The City of Avon Park's budget is based on a fiscal year. The fiscal year begins on October 1 and ends on September 30.


Funds Included


The City's budget is prepared for General, Community Redevelopment Agency and Infrastructure Funds on the modified accrual basis. A legally adopted annual budget is not prepared for the Community Development Block Grant Fund. The Community Development Block Grant is a multi-year grant, which has a budget prepared for the total program as outlined in the grant agreement.The City also adopts operating budgets for the Enterprise Funds on a modified accrual basis. The difference between the budgetary basis and the basis used to account for the results of operations are the City Budgets capital outlays and debt service transfers, which includes principal payments. Budgets are not prepared for the Pension Trust Funds. The legal level of budgetary control is at the department level.


Basis of Budgeting


Governmental accounting and financial reporting are conducted consistent with "Generally Accepted Accounting Principles, commonly referred to as "GAAP". Readers are typically familiar with a concept know as the "basis of accounting", which describes the measurement method used in accounting for financial transactions. The City of Avon Park uses the GAAP basis of accounting. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. Operations for each fund are accounted for separately. Each fund self -balances the accounts for assets, fund equity, revenues and expenditures. The basis of budgeting and the basis of accounting are the same for all funds. Governmental Funds are used for governmental activities, which include general government, public safety, physical environment, culture and recreation, and economic environment. The City maintains three individual governmental funds, general fund, infrastructure fund, and community development block grant fund. The general fund and the infrastructure fund are considered to be major funds. Governmental Funds are based on the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the period in which services or goods are received. The basis of budgeting and accounting are the same for the Governmental Funds. Enterprise funds are used to report the same functions presented as business-type activities. The City maintains three enterprise funds. These are used to account for its water and sewer, airport and solid waste operations. All of these funds are considered to be major funds. The Enterprise Funds (Proprietary Funds) are budgeted on a modified accrual basis, which is not the same basis of accounting as that used to account for actual results of operation (accrual basis). The Primary differences between the budgetary basis and the basis used to account for the results of operations are the City budgets capital outlays and debt service transfer, which includes principal payments. Revenues are recognized in the period in which they are earned. Expenditures are recognized in the period in which they occur. Adjustments are made at fiscal year end as part of fiscal year closing. At the end of each year, all budget appropriations lapse along with outstanding encumbrances in most cases. Large projects can be carried over to the next budget year. The Finance/Accounting Supervisor and the City Manager may re-apropriate funds in the subsequent fiscal year after review. The comparison of final budget to actual revenues and expenditures in the Annual Financial Report (AFR) requires a reconciliation of the budgetary basis to GAAP basis. The budget is prepared, for the most part, to be consistent with GAAP to minimize the degree of reconciliation needed to compare the budget to actual.

Adoption Process


The annual budget process is based on Florida Statutory requirements. The annual budget process begins in May. Department budget requests are submitted to the Finance/Accounting Supervisor on June 1. Workshops are held with the departments during June. The Finance/Accounting Supervisor and the City Manager review the department requests and make any changes. The proposed budget is presented to the City Council the third week in July. The City Council sets the proposed millage rate and the date of the first public hearing. Proposed millage rates are submitted to the Property Appraiser's office along with the date of the first public hearing by August 4. The first public hearing is in September. Any changes directed by the Council at the first public hearing are made for the tentative budget, which is presented at the second public hearing in September. The second public hearing is advertised by a public notice with detailed information of the tentative millage rates and the tentative budget. At the second public hearing the Council adopts a resolution stating the millage rates to be levied and adopts the final budget. The adopted budget becomes effective on October 1. The proposed millage rates, which are determined at the Council and Staff meeting in July are used by the Property Appraiser to prepare Truth-in-Millage (TRIM) notices which are distributed in August. The TRIM notice advises the taxpayer of the proposed tax rates. All local taxing authorities combined with current information assessed values of real property will affect the taxes on each parcel of land. The TRIM notice also serves as the official notification of the time and place of the first public hearing for adoption of both tentative millage rates and a tentative budget. Within fifteen days after the first public hearing, the City must publish two adjacent budget ads in a newspaper of general circulation in the City. One advertisement notifies the City residents of the City's intent to finally adopt millage rates and a budget, identifying any increase in property taxes. The second advertisement summarizes the tentative budget, showing the total oaf all funds, the proposed millage rates, balances, reserves, and major revenues and expenditures classifications. Specific size, placement and wording requirements apply as set forth in the Florida Statutes.

 

April 1 Departments are requested to review the 5 year Capital Improvement Plan (CIP) and submit any changes.
May 1 Instructions are given to departments to prepare their budget requests.
June 1 Completed budget requests are returned to the Finance/Accounting Supervisor.
June 1 Preliminary tax roll information from the Property Appraiser's Office is received.
June 12 Finance/Accounting Supervisor and City Manager review the department requests.
July 1 The Property Appraiser certifies the taxable value within the City.
July 9 Council sets the preliminary millage rate and fire assessment rate.
August 3 The Finance/Accounting Supervisor advises the Property Appraiser of its proposed millage rate, rolled back rate and the date, time and place at which the public hearing will be held. (within 35 days of certification)
August 4 Tentative Budget will be presented to Council for discussion.
September 10 The City holds a public hearing on the tentative budget and proposed millage rate, amend, and adopt a tentative budget and CIP Plan.
September 19 The City advertises in a newspaper of general circulation the City's intent to finally adopt a millage rate and budget.
September 24 The City holds its final (second) public hearing and adopts a final millage rate and budget.

 

Procedures for Amending the Budget
After the formal adoption of the budget in September for the fiscal year beginning October 1, changes may be made to the budget with a budget amendment. An amendment is a process to increase or to decrease an existing budget. At no time can the budget be amended so that it is no longer balanced. Most amendments are usually initiated by the individual department that is affected by the change. A budget adjustment form is completed by the department head or the Finance/Accounting Supervisor. The form must state the increase and decrease in specific accounts with justification why the action is needed. The Finance/Accounting Supervisor or the City Manager can approve all amendments under $10,000 with the exception of amendments, which involve transferring contingency funds.

The City Council at any time during the fiscal year may amend the budget for that year as follows:
1. Appropriations for expenditures in any fund may be increased or decreased and other appropriations in the same fund are correspondingly increase or decrease. The total of appropriations of the fund are not changed.
2. The reserve for contingencies may be used to increase the appropriation for a particular expenditure in the same fund.
3. Revenues from a source not anticipated and received for a specific purpose such as grants, donations, or gifts may be appropriated and expended for that purpose.

POLICIES RELATING TO FY 2014-2015 BUDGET

Balanced Budget: The City's annual budget shall be balanced with the total of estimated receipts, including balances brought forward to equal the total appropriations and reserves.

Budget Adoption: The City's annual budget is adopted by the City Council at each department level.

Contingencies: A reserve for contingencies may be established for each fund during the budget process. Florida Statues require that reserves for contingencies not exceed ten percent of the total budget.

Estimates of Receipts: The estimated receipts shall include a minimum of 95% of the anticipated ad Valorem tax proceeds. State of Florida revenue sharing receipts are based on the projections provided by the Legislative Committee on Intergovernmental Relations. All other receipts are based on the source of the corresponding revenue.

Gas Taxes: The use of gas tax revenues is limited to the construction and maintenance of the City's roads and related items.

Sales Tax: The use of sales tax revenues will be generally limited to the Infrastructure Surtax Fund. The fund accounts for the county wide one cent (1%) sales tax above the state sales tax rate of 6%. The infrastructure fund is used for capital improvement projects and public safety equipment.

Grant Supported Projects: The City has various projects, which depend on outside grants for partial funding. In the event of reductions in the outside funding, the program service levels will be reduced, unless other funding is obtained.

Operating Reserves: The City strives to maintain adequate undesignated reserves in all of the operating funds to provide against revenue fluctuations and unforeseen emergencies.

Budget Transfers: Budget transfers over the amount of $10,000 require the approval of the City Council. The City Manager and the Finance/Accounting Supervisor has the authority to approve interdepartmental transfers up to $10,000.

Interfund Transfers: Interfund transfers are fixed when the budget is adopted.