Budgeting For Small Jurisdictions Presented by Craig Gibons

Budgeting For Small Jurisdictions Presented by: Craig Gibons, Executive Director, Tax Supervising & Conservation Commission OGFOA Spring Conference 2016 Tuesday March 8, 10: 30

Tax Supervising and Conservation Commission http: //www. tsccmultco. com/ Craig Gibons craig. gibons@Multco. us 2

Today’s Proposed Agenda 10: 30 Welcome, Introductions, & Agenda Setting 10: 45 Preliminary Building Blocks 4 -9 11: 00 Proposed Budget 16 -39 10: 20 Approved Budget 40 -54 11: 40 Adopted Budget 66 -64 11: 50 Discussion 3

What do we do? Monitor 41 taxing jurisdictions for budget law conformance Assist any jurisdiction with budget law conformance 4

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Other Functions Ptax Ballot Measure Hearings Annual Report (300 pages of local government budgets, debt, and Ptaxes) Publish Weekly Update on local government financial issues. Send me an email to subscribe: craig. gibons@multco. us 6

Preliminaries 294. 338 Compliance with Local Budget Law required prior to expenditure or tax certification (1) A municipal corporation may not expend money or certify to the assessor an ad valorem tax rate or estimated amount of ad valorem taxes to be imposed in any year unless the municipal corporation has complied with ORS 294. 305 (Sections constituting Local Budget Law) to 294. 565 (Failure to file copy of required budget, reports or other documents). 7

Preliminaries 8

Preliminaries Budget Officer Appointed by Governing Body (unless…) Prepares or supervises preparation of budget Acts at direction of Executive Officer or Governing Body 294. 331 9

Preliminaries Budget Calendar Not required by statute but highly recommended. See Handout 1 10

Preliminaries Budget Committee Governing body and equal number of appointed electors Serve staggered three year terms All have equal authority Must have majority of total membership to hold a meeting Action requires majority vote of total membership 294. 414 See also 150 -294. 414 & 426 11

Preliminaries Allied Documents Board Priorities Three-Year Long Range Financial Plan See Handout 2 Five Year Capital Projects Plan Vehicle and Equipment Replacement Plan 12

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The Proposed Budget Detail Sheets Budget numbers are good faith effort estimates Resources must equal Requirements (Each fund has to balance) Negative resource amounts are not allowed 14

The Proposed Budget Detail Sheets 2013 -14 Actual 2014 -15 Actual 2015 -16 Revised Budget Line Item $ $$ $$$ Wages Matches numbers from respective year’s audit or CAFR 2016 -17 Budget FTE 10 Adopted budget as modified by supplemental budgets or budget transfer resolutions Proposed Approved Adopted $$$$ The Proposed Budget as prepared by the Budget Officer for presentation to the Budget Committee 15

The Proposed Budget Detail Sheets Alternative 13 -14 Actual 14 -15 Actual $ $$ 2015 -16 Rev. Estimated Bud Expenditures $$$+ 2016 -17 Budget Line Item FTE Wages 10 Proposed App Adopt $$$$ 16

The Proposed Budget Detail Sheets 2013 -14 Actual 2014 -15 Actual 2015 -16 Est. Expend. Line Item $ $$ $$$ Wages 2016 -17 Budget FTE 10 Proposed Approved Adopted $$$$ ORS 294. 358(1) “…the estimated expenditures for the current year…. ” 17

The Proposed Budget Resources 18

The Proposed Budget The Formula Beginning Fund Balance + Resources Requirements = Ending Fund Balance = Next Year’s Beginning Fund Balance 294. 398 19

The Proposed Budget Step 1: Estimate Beginning Fund Balance (BFB) Cash on hand on day budget is prepared + Estimated revenue for duration of fiscal year - Estimated expenditures for duration of fiscal year = Current Year Ending Fund Balance = Next year’s Beginning Fund Balance 20

The Proposed Budget Step 2: Estimate Taxes Rate-Based Levy Or Dollar Amount Levy? Rate-Based $X. XXXX Permanent Levies Local Option Levies Dollar Amount $XXX, XXX GO Bond Levies Optional Method for: Permanent Levies Local Option Levies 21

The Proposed Budget Dollar Amount Tax Levies Calculating Taxes to be Levied Example: Total Requirements Less Existing Resources Equals Taxes Needed 50, 000 Collection % /. 950 Taxes Imposed Measure 5 Loss (Zero for GO Bond Levies) Equals Tax Levy $ 60, 000 - $ 10, 000 = $ 50, 000 $ = $ 53, 000 + $ 1, 000 = $ 54, 000 Levy to Approve, Adopt & Certify: $ 54, 000 22

The Proposed Budget Step 3: Estimate Rest of Resources Ø Ø Ø Ø Ø Property Taxes (current year) Prior Year Property Taxes Fees, Licenses, Fines Enterprise Revenue Federal / State / Local Revenue Grants Interest on Investments Bond or other Debt Proceeds Sale of Assets ORS 294. 361 23

The Proposed Budget Balance Funds Resources = Requirements Resources Are: Requirements Are: Beginning Fund Balance + Revenues + Transfers In = Resources Expenditures + Transfers Out + Ending Fund Balance = Requirements 24

The Proposed Budget Requirements 25

The Proposed Budget Requirements 26

The Proposed Budget Step 1: Estimate Personal Services Personnel Services are budgeted by organizational unit or activity and total FTE. Current salaries/salary ranges not required to be in budget document but must be available upon request. 294. 388(5) 27

The Proposed Budget Step 2: Estimate Materials and Services 28

The Proposed Budget Step 3: Capital Outlay Undefined Can be Allocated or Unallocated ORS 294. 388(6) Should integrate with Capital Project and Capital Expenditure Plans 29

The Proposed Budget Step 4: Estimate Debt Service Debt service estimates must include separate amounts for principal and interest for each bond issue in each fund. 294. 388(6) Each bond issue or borrowing is identified by the issue date and exact payment date. State Department of Revenue Recommendation 30

The Proposed Budget Step 5: Contingency “The estimate for a fund may include an estimate for general operating contingencies. ” 294. 388(7) Contingency is for expenditures in operating funds that “cannot be foreseen and planned in the budget” and should be based on prior history or risk analysis. 150 -29. 388(7) There is no limit on how much can be budgeted as contingency, other than noted above. However, only transfers up to 15% of the fund’s total appropriations can be transferred to other appropriation line items without having to complete a supplemental budget. 31

The Proposed Budget Step 6: Unappropriated Ending Fund Balance 1. For beginning cash to start the next year 2. To reserve cash for multi-year construction projects or in reserve funds. 3. Cannot be spent during the year except in specified situations. 4. “Reserved for Future Expenditures” in a Reserve Fund can be spent during the year, but only for purposes for which the fund was established and after governing body action. 32

The Proposed Budget Step 7: Calculate Ending Fund Balance Beginning Fund Balance + Resources Requirements = Ending Fund Balance 33

The Proposed Budget Step 8: Write Budget Message 294. 403 1. 2. 3. 4. 5. 6. Explains budget document Describes proposed financial policies for ensuing year Describes important features of the budget document Notes salient changes in appropriation and revenue items Explains major changes in financial policies Notes changes in method of accounting and the impact Prepared at direction of CEO or Presiding Officer Presented to Budget Committee with budget document @ Committee’s first meeting 34

The Proposed Budget Step 9: Compile Budget Document Defined: The budget detail sheets, Tax levy, and Financial summary (294. 311(6)) Provide to Budget Committee 35

The Budget Committee Process Meeting Notice Use the State Form Handout 3 36

The Budget Committee Process Meeting Notice Four Notification Methods Print twice in newspaper of general circulation Ø 5 -30 days before the meeting Or once in newspaper (must include web address) and Ø On district website in “prominent manner” Ø For at least 10 days before meeting Mail to each street address, rural route or PO Box at least 10 days prior to the meeting date Hand delivery to each street address at least 10 days prior to the meeting 294. 426 37

The Budget Committee Process Distribute Budget Document At or before first Budget Committee meeting Distribute with State’s recommendations on discussion Handout 4 When given to Budget Committee it becomes a public document and a copy must be available for the public Means of duplication must be available to public. District may charge reasonable fee for photo copies. 38

The Budget Committee Process Listen and Deliberate 1. Call to Order 2. Elect Presiding Officer 294. 414 (9) 3. Receive the Budget and Budget Message 294. 426(1)(a) 4. Listen to Staff Presentations 5. Ask Questions and Deliberate 6. May Demand Receive Information 294. 428(3) 7. Hold At Least One Hearing On The Budget 294. 426(1)(b) 39

The Budget Committee Process Taking Action The budget committee must have a quorum present in order to conduct business or take action. v A quorum is one more than half the number of filled positions v Action requires an affirmative vote of the majority of the total budget committee membership. 150 -294. 414 40

The Budget Committee Process Deliberate, Act, & Approve 8. Ask Questions and Deliberate 9. Modify the Budget 10. Approve the Budget 294. 428 (1) 11. Approve Property Tax Rate &/or Amount 294. 428(1) 41

The Budget Committee Process Post-Approval Budget staff completes the Approved Budget column as approved by committee. 2013 -14 Actual 2014 -15 Actual 2015 -16 Est Actual Line Item $ $$ $$$ Wages 2016 -17 Budget FTE 10 Proposed Approved Adopted $$$$ 42

Budget Adoption Process 1. Prepare Financial Summary (LB, ED, UR-1) 294. 438 2. Schedule and notice a Budget Hearing 294. 438 3. Hold Public hearing to accept comments from the public. 294. 453. 4. Prepare Budget Resolution to Adopt the budget. 294. 456 43

Budget Adoption Notice Use State Form Ø General Governments (Form LB – 1) Ø Education Districts (Form ED – 1) Ø Urban Renewal Agencies (Form UR – 1). Ø An alternative, narrative format can also be used, but must include all the same information. 294. 438(1) Handout 5 44

Budget Adoption Budget Hearing Any person may appear for or against any item in the approved budget document. 45

Budget Adoption Post-Hearing Action After the hearing and “consideration of matters discussed at the public hearing” (294. 456(1)(a)), the governing body shall enact the budget resolution 46

Budget Adoption Post-Hearing Action The governing body may amend the budget estimates and tax rate or levy amount (and thus the resolution) prior to adoption, within limits. (294. 456(1)(b)) v Expenditures in a fund cannot be increased by more than $5, 000, or 10%, whichever is greater ($10, 000 or 10% in a 2 year budget) v The tax levy rate or amount approved by the budget committee cannot be increased 47

Budget Adoption Budget Resolution The Budget Resolution: Ø Adopts the Budget Ø Makes Appropriations Ø Declares and Categorizes Property Tax Rate or Amount. Handouts 6 and 7 48

Budget Adoption Budget Resolution v The resolution appropriations are the district’s legal authority to expend public funds… …. not the budget. v They can not lawfully be exceeded v Note that resources are not in the resolution or ordinance. 49

Budget Adoption Adopted Budget Document The Adopted Budget Document must have: a) b) c) d) e) f) g) h) The two budget committee notices Budget hearing notice Budget detail sheets Resolution adopting budget and making appropriations Resolution imposing property taxes Resolution categorizing the taxes Notice of property tax levy form (LB, ED, CC-50) Samples of ballots of any new property tax approved by voters, for first time levy 150 -294. 311 (6) 50

Post Adoption Actions Filing Requirements By July 15 Assessor’s Office in each county Ø Ø Ø Two copies of resolutions The property tax certification (Form LB, ED, UR– 50) Ballot Title for any new voter-approved property taxes (Handout 8) By September 30 to the County Clerk in each county Ø Budget Document (In Multnomah County Budget document is filed with TSCC. ) 51

Post Adoption Actions Correcting Mistakes 294. 451 Should you find: Ø Ø Ø Scriveners’ Errors Mail or delivery deficiencies Arithmetic Errors Miscalculation of Property Tax Levies Missing Publishing Deadlines Inform Governing Body at its next meeting and correct 52

Post Adoption Actions Changes After Adoption Statutes allowing changes after adoption: Ø Ø Ø Ø Ø 294. 338; exceptions to local budget law 294. 463; transfers of appropriation authority 294. 468; interfund loans not paid back in same year 294. 471; Supplemental budget 294. 473; Supplemental budget 294. 343; Internal Service Funds 294. 466; appropriation of pass-through revenues 294. 476; newly approved Local Option Levy taxes 294. 478; education district emergencies 294. 481; expenditures of funds in response to emergency situation 53

Preliminaries 294. 338 Compliance with Local Budget Law required prior to expenditure or tax certification (1) A municipal corporation may not expend money or certify to the assessor an ad valorem tax rate or estimated amount of ad valorem taxes to be imposed in any year unless the municipal corporation has complied with ORS 294. 305 (Sections constituting Local Budget Law) to 294. 565 (Failure to file copy of required budget, reports or other documents). 54

Resources TSCC Staff, available anytime, anywhere TSCC web site: www. tsccmultco. com DOR Local Budget Law Training sessions DOR’s annual Local Budget Law and Notice of Property Tax Forms and Instructions booklet DOR Local Budgeting Manual DOR web site: http: //www. oregon. gov/DOR/programs/property/Pages/local-budget. aspx 55

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