Municipal Budgeting 101

PO Box 519
419 N. Broadway Street
Abilene, KS 67410
(785) 263-2550
www.abilenecityhall.com
http://abilene-ks.blogspot.com
City of Abilene, Kansas
• City of the Second Class
• 2010 Census Population of 6,844
• $16.8 million budget
• 64 regular FTE  ~150 employees in summer
• Commission-Manager form of government:
▫ Governed by five at-large City Commissioners
responsible for policy
▫ Day-to-day administration by City Manager
What is a budget?
• Tool to help allocate scare public resources to
community services or issues.
• Mandated by K.S.A. 79-2925 et seq.
• Serves as:
▫ Financial Plan
▫ Resource Allocation Plan
▫ Policy Guide
▫ Communication Tool
Budgetary Law
• Budgetary Law: Kansas budgetary law requires
local units of government to adopt a balanced
budget through a process open to the public.

• Once approved, the unit of government is bound

by the adopted budget and may not raise taxes
or spend moneys other than as provided therein.

• K.S.A. 79-2925 et seq.

Budgetary Law
Citizens can help by sharing their thoughts and
ideas on where expenditures should be made
and how much should be spent.

According to Kansas law, the budget must be

balanced for each fund. This means that total
revenues in each fund must equal total
expenditures.
Cash Basis Law
• Cash Basis Law: Prohibits cities from creating
indebtedness unless there is money on hand in
the proper fund, unencumbered by previous
commitments, with which to pay the
indebtedness.

• K.S.A. 10-1101 et seq.

April •Preliminary review of current year
revenues and expenditures;
•Begin public engagement.
May •Preliminary budget discussion with
City Commission;
•Distribute budget worksheets to
departments;
•Distribute notices to external
agencies.
June – July •City Commission reviews proposed
CIP and operating budget.
July •Final review of budget by City
Commission;
•Public Hearing on Budget.
August •City Commission adopts budget;
•Approved budget filed with County
Clerk.
Funds
The accounts of the City are organized on the basis
of funds.

Each fund is considered a separate accounting

entity and can be thought of as its own
checkbook.
Types of Funds
• General Fund

• Special Revenue Funds

• Bond and Interest Fund

• Enterprise Funds
General Fund
• Main operating fund of the City

• Used for general operation of the City

Special Revenue Funds
• Account for revenues resulting from specific
taxes, governmental grants, and other revenue
sources
• Support specific functions or activities of the
City

Examples include: Library, Tourism and

Convention, Special Parks & Recreation, Special
Alcohol & Drug, Special Highway
Bond and Interest Fund
• Accounts for the payment of principal and
interest on the City’s General Obligation (G.O.)
Bonds
Enterprise Funds
• Include water, wastewater, and storm water
utilities, and recycling

• Self-supporting funds

• User fees support all operational and capital

costs
Capital Improvement Program
• Long-term capital planning document

• Used to plan, budget, and finance the purchase

and/or construction of large capital
infrastructure, facilities, equipment, and other
capital assets
Capital Improvement Program
• Three Tiers:
▫ Projects Programmed
▫ Projects for Further Review
▫ Projects Identified but Unfunded

• Funding Structures:
▫ “Pay-as-you-go”
▫ Mill levy or sales tax proceeds, user fees or other
revenues sources
Major Sources of Revenue
• Ad Valorem Taxes
• Local Sales Taxes
• Franchise Fees
• Investment Income
• Utility Fees
• Court Fees
Major Expenditures
• Personnel
• Contractual Services
• Commodities
• Capital Outlay
• Debt Service
FY 2011 General Fund
FY 2011 General Fund Revenues
(rounded figures in millions of dollars)

$0.3
$0.2
$0.4
Unencumbered Balance
$1.8 Property Tax
Motor Vehicle Tax
$0.6
Local Sales Tax
Franchise Fees
Intergovernmental Aid
$1.2 Utility Transfers
$1.3 Miscellaneous

$0.2
FY 2011 General Fund Revenues
3%
5%
7% Unencumbered Balance
31% Property Tax
Motor Vehicle Tax
10%
Local Sales Tax
Franchise Fees
Intergovernmental Aid
19% Utility Transfers
22% Miscellaneous

3%
FY 2011 General Fund Expenditures
(rounded figures in millions of dollars)

$0.3 $0.2
$0.3
$0.1 Administration
Police
$2.0
Fire
Streets
$1.2
Flood Control
Park Facilities
Community Development
$0.7 Court
$1.2
General Fund Expenditure Breakdown

Administration,$0.34 Fire, $0.11 Park Facilities, $0.05

Community
Streets, $0.20 Police, $0.20
Development, $0.05

Flood Control, $0.02 Court, $0.03

General Fund Revenues v. Expenditures
$5.0
Millions

$4.5

$4.0

$3.5

$3.0

$2.5

$2.0 The City Commission

$1.5
authorized $200,000 for
downtown street
$1.0
improvements.
$0.5

$-
2005 2006 2007 2008 2009 2010 2011B

Revenue Expenses
Assessed Valuation and Mill Levy
$60 40
Millions

35
$50
30
$40
25

$30 20

15
$20
10
$10
5

$- 0
1994 1998 2002 2006 2010

Assessed Valuation Mill Levy

Mill Levy Breakdown

Hospital District, $0.02

Rec Commission, $0.02

State, $0.01

City, $0.26 County, $0.33 USD 435, $0.35

Cemetery, $0.01
Mill Levy Calculation
Appraised Value: $106,800 (median)

1. Calculate Assessed Value

$106,800 (11.5%) = $12,282
2. Calculate Property Taxes
$12,282/1000 = 12.282
12.282(126.793) = $1,557.27 per year

An increase of 1 mill = $51,679 in new revenue

Municipal Services
• Law Enforcement • Code Enforcement
• Fire Protection • Street Maintenance
• Park Maintenance • Swimming Pool
• Municipal Court • Water Utility
• Sewer Utility
• Abilene Airport
• Storm Water Utility
• Community • Recycling Center
Development • Recreation Programs
• Building Inspections
Mill Levy Comparison
176.341
164.13
136.385 145.138
122.55 126.793

70.146
48.474 54.915
33.454 37.611 City Levy
25.855
Total Levy
Sales Tax Comparison

9.55%
8.15% 8.20% 8.80% 8.80%
7.30%

Chapman Abilene Salina Herington Clay Junction

Center City
FY 2011 Miscellaneous Funds
Other Tax-Levied Funds
Fund Expenditures Ad Valorem Taxes
Debt Service 1 $692,259 $133,944
Airport $68,440 $24,000
Library $267,642 $233,744
Fire Apparatus 2 $60,091 $30,000
Capital Improvement 2 $425,744 $25,000
Recreation Commission 3 $528,252 $239,745

1 Quasi-operational funds
2 Capital funds (non-operational)
3 Mill levy approved by Recreation Commission
Non-Tax-Levied Funds
Fund Expenditures Funding Source
Special Highway $617,822 Kansas Gas Tax
Recycling $375,212 Recycling Fees
Special Parks and Recreation $47,042 Local Alcohol Tax
Special Alcohol and Drug $23,937 Local Alcohol Tax
Storm Drainage $572,335 Storm Drainage Fee
Tourism and Convention $230,360 Transient Guest Tax
Non-Tax-Levied Funds
Fund Expenditures Funding Source
Special Liability $16,067 Transfer
Equipment Reserve $326,731 Transfer
Water Equipment Reserve $778,355 Transfer
Sewer Equipment Reserve $230,319 Transfer
Special Revenue Community Center $148,666 Sales Tax (sunset)
Special Revenue Library/Pool $418,790 Sales Tax
FY 2011 Water Fund
FY 2011 Water Fund Revenues
(rounded figures in millions of dollars)

$0.3
Water Sales
$0.2 Unencumbered Balance

$0.2 Penalties

$1.5 Water Protection Fee

$0.2
Miscellaneous
FY 2011 Water Fund Revenues
1% 1% 2%

11%
Water Sales
Unencumbered Balance
Penalties
Water Protection Fee
Miscellaneous

85%
FY 2011 Water Fund Expenditures
(rounded figures in millions of dollars)

$0.5
$0.6
Production
Distribution
$0.3 Administration
Transfer
$0.7 $0.2 Debt Service
Water Fund Expenditures Breakdown

Administration, $0.13

Production, $0.31 Distribution, $0.19 Transfers, $0.04 Debt Service, $0.33

Water Fund Revenue v. Expenditures
$1.8
Millions

$1.6

$1.4

$1.2

$1.0
Revenue
$0.8 Expenses
The City Commission has previously
$0.6 elected to use reserves rather than increase
water rates, although a rate increase was
$0.4 approved in 2010. Revenues are projected
to approach balance with expenditures.
Future rate increases will enable the Water
$0.2
Fund to eventually surpass this milestone.

$-
2005 2006 2007 2008 2009 2010 2011B
FY 2011 Sewer Fund
FY 2011 Sewer Fund Revenues
(rounded figures in millions of dollars)

$0.1

User Charges

$1.4 Unencumbered
Balance
Miscellaneous
$1.8
FY 2011 Sewer Fund Revenues
2%

User Charges

43% Unencumbered
Balance

55% Miscellaneous
FY 2011 Sewer Fund Expenditures
(rounded figures in millions of dollars)

$0.5 Production
$0.6
Distribution

Administration
$0.3
Transfer

$0.7 $0.2 Debt Service

Sewer Fund Expenditures Breakdown

Collection, $0.05

Treatment, $0.13 Administration, $0.61 Debt Service, $0.19

Transfers, $0.04

Administration includes
unencumbered carry-
over balance.
Sewer Fund Revenue v. Expenditures
$1.8
Millions

$1.6

$1.4

$1.2

$1.0
Revenue
$0.8 Expenses

$0.6

$0.4

$0.2

$-
2005 2006 2007 2008 2009 2010 2011B
Municipal Debt
Types of Municipal Debt
• Bonds
▫ General Obligation (G.O.) - 22% of all debt
▫ Revenue - 0% of all debt
▫ G.O. Special Benefit – 37% of all debt
• Lease Purchases - 2% of all debt
• State Revolving Loans – 39% of all debt
• Certificates of Participation – none outstanding
• Temporary Notes – none outstanding
Municipal Debt
• Total Outstanding Debt: $28 million

• State Water Revolving Loan: $856,000

• State Wastewater Revolving Loan: $10 million

• Lease Purchase Agreements: $623,458

Municipal Debt
• G.O. Debt: $16.5 million
▫ First Street Project: $2.5 million
▫ Library and Pool Renovation: $3.6 million

• G.O. Debt restricted to 30% assessed valuation

• 2011 Statutory Debt Limit is $15.5 million (94%)

• G.O. Special Benefit : $10.4 million (excluded

from statutory limit)
Budget Forum
• “Budget Choices” Forum:
▫ May 5th at 7:00 pm
▫ Eisenhower Visitors Center Auditorium

• Hands-on budget exercise;

• Prioritization and decision-making;
• Develop a “mock” budget for Abilene; and
• Input will be provided to the City Commission.