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City Budgeting Manual for FY 2018

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City Budgeting Manual for FY 2018 City Budgeting Manual for FY 2018 Association of Idaho Cities 3100 S. Vista Ave. Ste. 201 Boise, ID 83705 Tel. (208) 344-8594 or (800) 344-8594 Fax (208) 344-8677 www.idahocities.org Preface The City Budgeting Manual for FY 2018 is a comprehensive resource manual providing information and analysis to assist city officials in planning and adopting the Fiscal Year 2018 budget. For new city officials the chapter on “The Basics of City Budgeting” is a useful primer on the various aspects of the budget cycle. The following chapter, “The City Budgeting Process: Understanding the Law,” identifies and explains the provisions of Idaho law that govern city budgeting. The relevant Idaho Code sections (or excerpts) are provided in gray textboxes. City revenue sources are discussed in detail in the chapter “Understanding Revenue Sources,” which also provides the relevant Idaho Code sections in gray textboxes. The manual concludes with an extensive glossary of budgeting and finance terms, and the appendices include revenue reports with projections. For assistance with any budgeting or municipal finance questions, do not hesitate to contact the AIC office (contact information is on the cover page). Table of Contents Introduction ........................................................................................................................1 The Basics of City Budgeting ............................................................................................3 Roles and Responsibilities .............................................................................................................. 4 The Executive/Administrative Role .................................................................................... 4 The Legislative/Policymaking Role .................................................................................... 4 Budget Classification Structure ..................................................................................................... 5 Funds................................................................................................................................... 5 Organizational Units ........................................................................................................... 7 Objects of Expenditure ....................................................................................................... 7 Source of Revenue .............................................................................................................. 8 Activity ............................................................................................................................... 9 Project ................................................................................................................................. 9 Coding the Budget Classification Structure ........................................................................ 9 Beginning the Budget Preparation Cycle .................................................................................... 10 Preparing the Budget Calendar ......................................................................................... 10 Policy Guidelines for the Budget ...................................................................................... 10 Developing Budget Requests ........................................................................................................ 11 Prioritizing and Planning City Services ............................................................................ 11 Department Budget Requests ............................................................................................ 13 Department Revenue Worksheet ...................................................................................... 13 Preparing and Adopting the Budget ............................................................................................ 14 Review of Requests by the Budget Officer ....................................................................... 14 Developing the Base Budget ............................................................................................. 14 Preparing Revenue Estimates............................................................................................ 15 Initial Review by Mayor and Council ............................................................................... 17 Development of the Budget Document ............................................................................. 17 Budget Hearing and Adoption .......................................................................................... 18 Budgeting Best Practices .............................................................................................................. 19 Build Reserve Funds to Cope with Unforeseen Situations ............................................... 19 Prudent Use of Nonrecurring Revenue ............................................................................. 20 Err on the Low Side with Revenues & the High Side with Expenses ............................... 21 Maintain a Long-Term Financial Perspective ................................................................... 21 The City Budgeting Process: Understanding the Law .................................................22 Fiscal Year ....................................................................................................................... 22 Notice to County Clerk of Budget Hearing ....................................................................... 22 Annual Budget, Public Notice and Budget Hearing ......................................................... 23 Certification of Property Tax Levy ................................................................................... 24 Annual Appropriations Bill ............................................................................................... 27 Accumulation of Fund Balances ....................................................................................... 29 Expenditures Not to Exceed Appropriations ..................................................................... 30 Miscellaneous Statutory Provisions Relating to Municipal Finance ................................. 31 Understanding Revenue Sources ....................................................................................32 Introduction ................................................................................................................................... 32 New Laws on City Revenue Sources for FY 2018 ....................................................................... 32 Property Taxes .............................................................................................................................. 32 Brief History of Property Taxes in Idaho .......................................................................... 32 Authority to Levy Property Taxes .................................................................................... 36 Increased Levies for Low Property Tax Cities.................................................................. 37 Temporary Override Levies .............................................................................................. 38 Permanent Override Levies ............................................................................................... 39 Foregone Property Tax Levies .......................................................................................... 39 Exempt Levies .................................................................................................................. 40 Levy Limits ....................................................................................................................... 41 Tax Money Due Monthly from County ............................................................................ 41 Certification of Valuation Dates ....................................................................................... 42 Fees ................................................................................................................................................. 46 User Fees as a Source of City Revenue ............................................................................ 46 Public Notice and Hearing on New/Increased Fees .......................................................... 46 Franchise Fees ............................................................................................................................... 48 Understanding Franchises & Franchise Fees .................................................................... 48 State Sales Tax Revenue Sharing ................................................................................................. 55 History of Revenue Sharing .............................................................................................. 55 Highway Distribution Account .................................................................................................... 63 History of the Highway Distribution Account .................................................................. 63 Annual Street Finance Report ........................................................................................... 70 State Liquor Account .................................................................................................................... 72 Distribution of the State Liquor Account .......................................................................... 72 Glossary of Budgeting and Finance Terms ...................................................................79
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