1. The Budget Process

2. Tim Magee Administrative Services (Finance) Director City of Helena, Montana tmagee@helenamt.gov 406-447-8412

3. Approach Use the Local Government Budget Laws as an outline (one law = one slide) Note each statute – do not “present” details – expand in response to Questions DO expand upon: – Cash Flow, including Reserves – Capital Planning and Financing

4. Handouts / E-Files Briefly Explain the Use of Each 1.Excel – Personnel Sheet 2.Excel – Cash Flow Sheet 3.Excel – Statement of Changes (Fund Summary) 4.Word – Tax Increase Resolution 5.Word – Budget Resolution 6.Word – Tax Levy Resolution

5. Outcomes / Understanding The Budget Process Making and communicating budget justifications Tracking, Monitoring and Amending a Budget Dealing with budget issues during the year – changing circumstances / various scenarios – budget problems

6. Helena’s Calendar JanuarySend Budget Instructions Jan/FebDevelop Department Budgets March/AprilManager’s Budget Review April/ MayPreliminary Budget Presented May/JuneComm. Budget Work Sessions Early JuneNotices of Budget Hearing Late JuneBudget Hearing & Adoption “Back” into a Budget Development Calendar

7. Basic Budget Steps Give City Staff current budget copies and a deadline to tell you what changes they want. Do a complete personnel worksheet Basic Personnel - in Excel format Do Revenue Estimates Cash Flow - in Excel format Input Budget Forms

8. Title 7, Chapter 6, Part 40 The Local Government Budget Act Completely Rewritten in 2001 Applies to all local governments The Budget Process

9. 7-6-4002 Definitions Governing Body Local Government Municipality Working Capital(Available Cash?) – (+) Current Assets(Cash + Receivables?) – (-) Current Liabilities – (-) Reserves

10. 7-6-4002 Working Capital - Reserves General Fund, Cash Flow Reserve allowed – MCA, 7-6-4034 – 50% of Appropriations / Expenditures Enterprise Cash Flow – typically 1.5 months Debt Service Reserves Discretionary Reserves – Capital, etc. Special Revenue Fund Balances = Reserves Other

11. 7-6-4003 Budget & Levies to DOA By October 1 st OR 60 days after Tax Values On Department of Administration (DOA) forms OR on Acceptable Alternative Budget Format

12. DOA Forms Internet: mt.gov/LGSB (local government services bureau) Accounting and Financial Reporting Section Documents

13. 7-6-4004 Budget fund structure “BARS” – Budget Accounting and Reporting System – Department of Administration (DOA) – Local Government Services Bureau How many want a brief overview of fund accounting ??

14. 7-6-4005 Expenditures Limited to Appropriations 7-6-4033 – Expenditure Limitation – OK to under spend This does not apply to revenue budgets – Over/Under collection of revenues not limited – Revenue budgets do not need to be amended

15. MCA 7-6-4006 Appropriation power -- requirements. 1.Council may appropriate 2.Use of Appropriations limited to Working Capital Fund and Appropriate before spending 3.Amendment by Authorized Procedures 4.Council Action to Amend Budgets

16. 7-6-4006 continued 3.Amendment by Authorized Procedures a.Debt payments b.Trust Funds c.Grants (budget the $$ match) d.Special Assessments e.Sale of Land f.Gifts or Donations g.Debt Borrowed

17. 7-6-4011 Use of bond proceeds and borrowed money MCA 7-6-4007 thru 4010 Reserved Automatic budget amendment for Bonds which are authorized by – election or – the council (revenue bonds, lease purchase)

18. 7-6-4012 Fee based budgets - adjustable appropriation In the annual budget resolution fee based budget amendments may be authorized For any proprietary and specially identified fee based appropriations

19. 7-6-4013 Fees for services - hearing and resolution Must be reasonable and related to the cost of providing the service. Municipal rate hearing required -- notice. – 69-7-111Utility rate hearing notice – 69-7-112Utility rate hearing – 7-1-4127Publication of notice – 7-1-4129 Mailing of notice

20. 69-7-111 Utility rate hearing notice Notice Published per 7-1-4127, except: – publish 3 times – 1 st notice no more than 28 days prior to hearing – 3 rd notice no less than 3 days prior to hearing Also – Notice Mailed – to all customers – no more than 30 days and no less than 7 days prior to public hearing

21. 69-7-112Utility rate hearing Conduct of municipal rate hearing Rates effective 10 days after decision/filing

22. 7-1-4127 Publication of Notice Notice must be – published twice, – with 6 days between notices. Utility Rates must obey 69-7-111 & 7-1-4127 7-1-4129 Mailing of Notice

23. 7-6-4014 Restriction on tax-financed expenditures if voter approval required. Can't spend in anticipation of approval of expenditure requiring voter approval. Voter approved levies see: 15-10-420 & 425

24. 7-6-4015Payments for Judgments 7-6-4016 thru 7-6-4019 Reserved

25. 7-6-4020 Preliminary annual operating budget 1.Must be prepared -- No “Approval” of Prelim 2.County officials 3.County - by June 1 notify - components required 4.Preliminary Budget - Minimum Content 5.Estimated amount to be raised by property taxes

26. 7-6-4020 part 3 continued Preliminary Budget – Minimum Content a.3 Year list of sources - Prior, Current, Proposed b.3 Year list of expenditures c.Projection of changes in cash balances d.List both proposed capital expenditures and capital projects e.Debt Obligations data f.Personnel Schedules - listing not required in budget document g.Other estimates for the budget

27. 7-6-4020 part 3 continued b. 3 Year list of expenditures 1 - Prior, 2 - Current, 3 - Proposed i.salaries & wages ii.operations & maintenance iii.capital outlay ** iv.debt service v.transfers out ** FY13 CCIP Fire Example Example in Excel Format

28. 7-6-4020 part 3 continued c. Projection of changes in cash balances Start withBeginning balance AddEstimated Revenue DeductProposed Expenditures (note: year end carryovers) DeductProposed/Required Cash Reserves EqualsEstimated Ending Balance Statement of Balances and Changes Example in Excel Format

29. 7-6-4021 Notice of preliminary or amended budget 1.Budget Hearing – content a.State preliminary or intent to amend b.On file, open for inspection c.date, time, place of meeting (hearing) d.taxpayer or resident may appear and be heard 2.Publication per 7-1-4127

30. 7-6-4022District court budgets 7-6-4023Repealed (State grants to District Courts – rules)

31. 7-6-4024 Hearing on preliminary budget 1.Hold hearing per notice 2.Officials to attend to answer questions 3.Hearing may be continued from day to day a.approve and adopt by resolution b.by 2nd Monday in August or within 30 days of DOR tax values

32. 7-6-4025 Receipt and expenditure of money prior to adoption of final budget. – provides authority due to budget adoption deadlines 7-6-4026 thru 7-6-4029Reserved

33. 15-10-420 Budgeting Increase of tax revenue Before Budgeting Increased Tax Revenue 1.Public Hearing on intent to increase TAX REVENUE a.Includes inflation allowed under 15-10-420 b.Excludes tax revenue from new growth c.May hold hearing in conjunction with budget hearing 2.Special advertisement -- wording of notice -- 7- 1-4127 Tax Increase Resolution Example in Word Format

34. 7-6-4030 Final budget - resolution - appropriations 1.May amend preliminary - hearing & comments 2.Must be balanced 3.Final Resolution - establish legal spending limits (what level? Fund? Line Item?) 4.Effective date of Resolution is July 1st - regardless of adoption date Annual Budget Resolution Example in Word Format

35. In-House Administrative Budgeting Subfunds - Project Accounting Supplemental record keeping. Project Accts = Supplemental Official “Master” Budget (Legal Limits) – Administratively create to subfunds/projects – Total of Subfunds/Projects = Master Budgets No “Formal” Budget Amendments

36. 7-6-4131 Budget amendment procedures 1.Resolution may delegate authority to transfer appropriations within same fund 2.Amend as provided in 7-6-4006 or 7-6-4012 3.Public Hearing to amend budget - EXCEPT as provided in 7-6-4006, 7-6-4011, 7-6-4012, 7- 6-4015, 7-6-4032

37. 7-6-4131 Budget amendment procedures 2.Amend as provided in: 7-6-4006, Appropriation power -- requirements, amendment process 7-6-4012, Fee Based Budgets (if authorized)

38. 7-6-4131 Budget amendment procedures 3.Amend as provided in: 7-6-4006, Appropriation power -- requirements, amendment process 7-6-4011, Bond Proceeds 7-6-4012, Fee Based Budgets (if authorized) 7-6-4015, Judgements 7-6-4032, Emergency expenditures

39. 7-6-4032 Emergency expenditures. Requires approval by 2/3rds of governing body

40. 7-6-4033 Expenditures limitation Limited to annual appropriation limit Exceptions as outlined in 7-6-4031(3) Limited by classifications in 7-6-4030(3) – Legal spending limit set by Council

41. 7-6-4034 Determination of fund requirements -- property tax levy. 1. Tax Levy Needs Formula a. + Appropriations / Expenditures b. + Cash Flow Reserve needs c. - Working Capital d. - Estimated Revenue (excluding tax levy) 2. Reserve allowed = 50% of Appropriations / Expenditures (excluding election & emergency)

42. 7-6-4035 Tax levies for boards and commissions -- bond exemption. City Commission approval required for all tax levies Subject to 15-10-420 Exceptions: – Port Authority – Legally pledged payment of debt – Operations of a “Regional Resource Authority”

43. 7-6-4036 Fixing tax levy by 2nd Monday in August or with 30 days after DOR tax values after Tax Increase hearing under 15-10-203 after Final Budget Adoption All Levies Subject to 15-10-420 Annual Tax Levy Resolution Example in Word Format