There is hereby created and established in and for the city a Finance Department to carry out the “Budget System–General Financial Policies” as approved .
The following Financial Policies are established to see that the City/Agency/Other Entity finances are managed in a manner which will (1) continue to provide for the delivery of quality services, (2) maintain and enhance service delivery as the community grows in accordance with the General Plan, (3) guarantee a balanced budget annually providing assurance of always living within our means, and (4) establish reserves necessary to meet known and unknown future obligations. To achieve these goals the following Financial Policies are presented which include General Policies, Reserve Polices, Revenue Policies, Cost of Services Policy, Expenditure and Budgeting Polices, Debt Policies, and Capital Improvement Plan (CIP)/Capital Equipment Program (CEP) Policies.
(A) General Policies.
(1) The City/Agency/Other Entities will manage its financial assets in a sound and prudent manner.
(2) The City/Agency/Other Entities will maintain sound financial practices in accordance with state law, and direct its financial resources toward meeting the City/Agency/Other Entity's long-term goals.
(3) The City/Agency/Other Entities will maintain and further develop programs to assure its long-term ability to pay all the costs necessary to provide the level and quality of service by its citizens.
(4) City/Agency/Other Entities will establish and maintain investment policies in accordance with state laws that stress safety and liquidity over yield.
(5) City/Agency/Other Entities will deliver service in the most effective manner, including utilizing the services of volunteers in areas where it is economically viable.
(B) Reserve Policies.
(1) The City/Agency/Other Entities will establish, dedicate and maintain reserves annually to meet known and estimated future obligations.
(2) The City/Agency/Other Entities will establish Specific Reserve Accounts which include but are not limited to designated reserves for the following:
(a) Reserve funds for Economic Uncertainties established during “Budget Sessions” to meet General Fund Reserve Goal. Using FY 2000 as a base line the fund balance was 4% of general fund expenses;
(b) Totally funded workers compensation;
(c) Liability insurance;
(d) Estimated cost of retirees medical payments;
(e) Depreciation and replacement of vehicles and major equipment; and
(f) Major maintenance and renovation of buildings, parks, and landscape maintenance;
(3) The City/Agency/Other Entities will establish reserves for replacement of facilities and infrastructure.
(4) The City/Agency/Other Entities will establish reserves for cash flow purposes.
(C) Revenue Policies.
(1) The City/Agency/Other Entities will strive to maintain a diversified, stable revenue base that is not overly dependent on any land use, major taxpayer, revenue type, restricted revenue, inelastic revenue, or external revenue.
(2) The City/Agency/Other Entities will aggressively pursue revenue collection and auditing to assure that moneys due are received in a timely manner.
(3) The City/Agency/Other Entities will seek federal and state grants and reimbursements for mandated costs whenever possible.
(4) The City/Agency/Other Entities will investigate potential new revenue sources, particularly those which will not add to the tax burden of residents or local businesses.
(5) The City/Agency/Other Entities will work proactively with the League of California Cities and local communities to monitor legislation that may impact us financially.
(6) The City/Agency/Other Entities will avoid targeting revenues for specific purposes whenever possible.
(7) The City/Agency/Other Entities will impose user fees when appropriate.
(8) The City/Agency/Other Entities will adopt a user fee policy, which establishes desired levels of cost recovery and determines the minimum frequency of user fee reviews.
(9) The City/Agency/Other Entities will prepare periodic financial reports of actual revenue received, for review by the City Council, to provide information on the status of the financial condition.
(10) The City/Agency/Other Entities will maintain and further develop methods to track major revenue sources and evaluate financial trends.
(11) The City/Agency/Other Entities will establish methods to maximize the accuracy of revenue forecasts.
(D) Cost of services policies.
(1) The City/Agency/Other Entities will review user fees and charges and attempt to set them as close as possible to the cost of providing services, except as provided by a Users Fee Policy or specific direction.
(2) The fees and charges will be set at a level that fully supports the total direct and indirect cost of the activity, including administrative overhead and depreciation, and in accordance with the Users Fee Policy.
(3) The City/Agency/Other Entities will require large developments to prepare a fiscal analysis, which measures direct and indirect costs and benefits to the city.
(E) Expenditure and budgeting Policies.
(1) The operating budget will be prepared to fund current year expenditures with current year revenue. However, surplus fund balances may be used to increase reserves, fund Capital Improvements Projects, Capital Equipment Programs, or be carried forward to fund future years' operating budgets when necessary to stabilize or meet a fund balance goal.
(2) The operating budget will state the objectives of the operating programs, and identify the service and resources being provided to accomplish the specified objectives.
(3) The operating budget will fully track and apportion all costs, fees, and General Fund transfers associated with the Enterprise Funds.
(4) Department expenditures are limited to:
(a) Department expenditures are limited to:
1. Personnel Services (Salary and Benefits).
2. Services and Charges.
3. Materials and Supplies.
4. Capital Outlay.
(b) All budget transfers across categories and funds require the approval of the City Manager.
(c) The City/Agency/Other Entities will fully accrue unused vacation annually.
(d) The City/Agency/Other Entities will periodically update project, equipment replacement and maintenance financing plans, and incorporate them into the Budget.
(F) Debt policies. The debt policies of the city/agency/other entities will be as set forth in a debt management policy adopted by resolution of the City Council.
(G) Capital Improvement Plan (CIP)/Capital Equipment Program (CEP) Policies.
(1) The City/Agency/Other Entities will construct all capital improvements in accordance with an adopted capital improvements program (CIP).
(2) The City/Agency/Other Entities will develop a five-year plan for capital improvements and a three-year plan for capital equipment to be updated at least annually. Future capital expenditures will be projected annually for a five-year CIP and three-year CEP based on changes in the community population, real estate development or replacement of the infrastructure.
(3) The City/Agency/Other Entities will coordinate preparation of the Capital Improvement Budget as close as possible with preparation of the annual Operating Budget taking into consideration the federal and state Funding Cycles. Future operating costs associated with new capital improvements and capital equipment will be projected and included in Operating Budget forecasts.
(4) The City/Agency/Other Entities will identify the estimated costs and potential funding sources for each proposed capital project(s) and replacement of capital equipment, before it is submitted to Council for approval.
(5) The City/Agency/Other Entities will attempt to determine the least costly financing method for all new projects and equipment.
(6) The estimated cost of Capital Improvement and Capital Equipment replacement for enterprise funds such as water, golf, or other enterprises will be updated at least every two years to ensure that rates and charges are covering the full costs of operating these programs.
(‘61 Code, § 2.70) (Ord. 278, passed - - ; Am. Ord. 1255, passed 10-6-99; Am. Ord. 1713, passed 4-19-17)