Section
Financial Administration
33.01 Definitions
33.02 Accounting records and financial reports
33.03 Annual budget ordinance
33.04 Annual audit of city funds
33.05 Official depositories; disbursement of city funds
33.06 Policy on bad checks sent to city
Improvements
33.10 Definitions
33.11 Financing of improvements
33.12 Apportionment of cost
33.13 Comprehensive report required
33.14 Public hearing required
33.15 Adoption of ordinance; notice to affected owners
33.16 Affected owner may contest
33.17 When city may proceed; assessment constitutes lien
33.18 Effect of additional property or change in financing
FINANCIAL ADMINISTRATION
As used in this subchapter, unless the context otherwise requires, the following definitions shall apply:
"BUDGET." A proposed plan for raising and spending money for specified programs, functions, activities, or objectives during a fiscal year.
"DEBT SERVICE." The sum of money required to pay installments of principal and interest on bonds, notes, and other evidences of debt accruing within a fiscal year and to maintain sinking funds.
"ENCUMBRANCES." Obligations in the form of purchase orders or contracts that are chargeable to an appropriation. An obligation ceases to be an encumbrance when paid or when the actual liability is recorded.
"FISCAL YEAR." The accounting period for the administration of fiscal operations.
"GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS." Those standards for audit of governmental organizations, programs, activities, and functions issued by the Comptroller General of the United States.
(KRS 91A.010(6))
"GENERALLY ACCEPTED PRINCIPLES OF GOVERNMENTAL ACCOUNTING." Those standards and procedures promulgated and recognized by the Governmental Accounting Standards Board.
(KRS 91A.010(7))
(A) The city shall keep its accounting records and render financial reports in such a way as to:
(1) Determine compliance with statutory provisions; and
(2) Determine fairly and with full disclosure the financial operations of constituent funds and account groups of the city in conformity with generally accepted governmental accounting principles;
(B) The municipal accounting system shall be organized and operated on a fund basis.
(KRS 91A.020)
(A) The city shall operate under an annual budget ordinance adopted and administered in accordance with the provisions of this section. No money shall be expended from any governmental or proprietary fund, except in accordance with a budget ordinance adopted pursuant to this section.
(B) Monies held by the city as a trustee or agent for individuals, private organizations, or other governmental units need not be included in the budget ordinance.
(C) If in any fiscal year subsequent to a fiscal year in which the city has adopted a budget ordinance in accordance with this section, no budget ordinance is adopted, the budget ordinance of the previous fiscal year has full force and effect as if readopted.
(D) The budget ordinance of the city shall cover one fiscal year.
(E) Preparation of the budget proposal shall be the responsibility of the Commission.
(F) The budget proposal shall be prepared in such form and detail as is prescribed by ordinance.
(G) The budget proposal together with a budget message shall be submitted to the Commission not later than 30 days prior to the beginning of the fiscal year it covers. The budget message shall contain an explanation of the governmental goals fixed by the budget for the coming fiscal year; explain important features of the activities anticipated in the budget; set forth the reasons for stated changes from the previous year in program goals, programs, and appropriation levels; and explain any major changes in fiscal policy.
(H) (1) The Commission may adopt the budget ordinance making appropriations for the fiscal year in such sums as it finds sufficient and proper, whether greater or less than the sums recommended in the budget proposal. The budget ordinance may take any form that the Commission finds most efficient in enabling it to make the necessary fiscal policy decisions.
(2) No budget ordinance shall be adopted which provides for appropriations to exceed revenues in any one fiscal year in violation of section 157 of the Kentucky Constitution.
(I) The full amount estimated to be required for debt service during the budget year shall be appropriated for all governmental fund types.
(J) The Commission may amend the budget ordinance at any time after the ordinance's adoption, so long as the amended ordinance continues to satisfy the requirements of this section.
(K) Administration and implementation of an adopted budget ordinance shall be the responsibility of the Commission. Such responsibility includes the preparation and submission to the Commission of operating statements, including budgetary comparisons of each governmental fund for which an annual budget has been adopted. These reports shall be submitted not less than once every three months in each fiscal year.
(L) To the extent practical, the system utilized in the administration and implementation of the adopted budget ordinance shall be consistent in form with the accounting system called for in § 30.02.
(M) No city agency, or member, director, officer, or employee thereof, may bind the city in any way to any extent beyond the amount of money at that time appropriated for the purpose of the agency. All contracts, agreements, and obligations, express or implied, beyond such existing appropriations are void; nor shall any city officer issue any bond, certificate, or warrant for the payment of money by the city in any way to any extent, beyond the balance of any appropriation made for the purpose.
(KRS 91A.030)
(A) Each city shall, after the close of each fiscal year, cause each fund of the city to be audited by the Auditor of Public Accounts or a certified public accountant. The audit shall be completed by March 1 immediately following the fiscal year being audited. The city shall forward an electronic copy of the audit report to the Department for Local Government for information purposes by no later than April 1 immediately following the fiscal year being audited.
(B) If a city is required by another provision of law to audit its funds more frequently or more stringently than is required by this section, the city shall also comply with the provisions of that law.
(C) The Department for Local Government shall, upon request, make available electronic copies of the audit reports and financial statements received by it under division (A) of this section to the Legislative Research Commission to be used for the purposes of KRS 6.955 to 6.975 or to the Auditor of Public Accounts.
(D) Each city required by this section to conduct an annual or biennial audit shall enter into a written contract with the selected auditor. The contract shall set forth all terms and conditions of the agreement which shall include but not be limited to requirements that:
(1) The auditor be employed to examine the basic financial statements, which shall include the government-wide and fund financial statements;
(2) The auditor shall include in the annual or biennial city audit report an examination of local government economic assistance funds granted to the city under KRS 42.450 to 42.495. The auditor shall include a certification with the annual or biennial audit report that the funds were expended for the purpose intended;
(3) All audit information be prepared in accordance with generally accepted governmental auditing standards which include tests of the accounting records and auditing procedures considered necessary in the circumstances. Where the audit is to cover the use of state or federal funds, appropriate state or Federal guidelines shall be utilized;
(4) The auditor shall prepare a typewritten or printed report embodying:
(a) The basic financial statements and accompanying supplemental and required supplemental information;
(b) The auditor's opinion on the basic financial statements or reasons why an opinion cannot be expressed; and
(c) Findings required to be reported as a result of the audit;
(5) The completed audit and all accompanying documentation shall be presented to the city legislative body at a regular or special meeting; and
(6) Any contract with a certified public accountant for an audit shall require the accountant to forward a copy of the audit report and management letters to the Auditor of Public Accounts upon request of the city or the Auditor of Public Accounts, and the Auditor of Public Accounts shall have the right to review the certified public accountant's work papers upon request.
(E) A copy of an audit report which meets the requirements of this section shall be considered satisfactory and final in meeting any official request to a city for financial data, except for statutory or judicial requirements, or requirements of the Legislative Research Commission necessary to carry out the purposes of KRS 6.955 to 6.975.
(F) Each city shall, within thirty (30) days after the presentation of an audit to the city legislative body, publish an advertisement in accordance with KRS Chapter 424 containing:
(1) The auditor's opinion letter;
(2) The “Budgetary Comparison Schedules-Major Funds,” which shall include the general fund and all major funds;
(3) A statement that a copy of the complete audit report, including financial statements and supplemental information, is on file at city hall and is available for public inspection during normal business hours;
(4) A statement that any citizen may obtain from city hall a copy of the complete audit report, including financial statements and supplemental information, for his or her personal use;
(5) A statement which notifies citizens requesting a personal copy of the city audit report that they will be charged for duplication costs at a rate that shall not exceed twenty-five cents ($0.25) per page; and
(6) A statement that copies of the financial statement prepared in accordance with KRS 424.220, when a financial statement is required by KRS 424.220, are available to the public at no cost at the business address of the officer responsible for preparation of the statement.
(G) Any resident of the city or owner of real property within the city may bring an action in the Circuit Court to enforce the provisions of this section. Any person who violates any provision of this section shall be fined not less than fifty dollars ($50) nor more than five hundred dollars ($500). In addition, any officer who fails to comply with any of the provisions of this section shall, for each failure, be subject to a forfeiture of not less than fifty dollars ($50) nor more than five hundred dollars ($500), in the discretion of the court, which may be recovered only once in a civil action brought by any resident of the city or owner of real property within the city. The costs of all proceedings, including a reasonable fee for the attorney of the resident or property owner bringing the action, shall be assessed against the unsuccessful party.
(H) In the event of extenuating circumstances that prevent a city from completing and submitting a required audit or financial statement in compliance with the applicable deadlines in division (A) of this section, the city may submit a written request for an extension of time to the Department for Local Government on a form prescribed by the Department for Local Government. The Department for Local Government shall approve the request if it is submitted on or before the applicable deadline and, in the judgment of the Department for Local Government, the request is warranted by extenuating circumstances beyond the control of the city. Extensions granted under this subsection shall not exceed nine (9) months from the original due date of the audit or financial statement. If the Department for Local Government approves an extension for a city and the city fails to complete and submit the required audit or financial statement in compliance with that extended deadline, then the provisions of division (I) of this section shall apply.
(I) If a city fails to complete an audit or financial statement and submit it to the Department for Local Government as required in divisions (A) and (H) of this section, the Department for Local Government shall notify the Finance and Administration Cabinet that the city has failed to comply with the audit requirements of this section, and that any funds in the possession of any agency, entity, or branch of state government shall be withheld from the city until further notice. The Department for Local Government shall immediately notify the Finance and Administration Cabinet when the city complies with the requirements of divisions (A) and (H) of this section for all prior fiscal years it has failed to comply with the audit requirements of this section, and the Finance and Administration Cabinet shall direct the reinstatement of payments to the city, including any funds that were withheld due to the noncompliance.
(J) Within a reasonable time after the completion of a special audit or examination conducted pursuant to KRS 43.050, the Auditor shall bill the city for the actual expense of the audit or examination conducted. The actual expense shall include the hours of work performed on the audit or examination as well as reasonable associated costs, including but not limited to travel costs. The bill submitted to the city shall include a statement of the hourly rate, total hours, and total costs for the entire audit or examination.
(KRS 91A.040)
(K) In lieu of the auditing requirements set forth in KRS 91A.040, if the city for the fiscal year in question receives and expends, from all sources, and for all purposes, less than $25,000, and which has no long-term debt, whether general obligation or revenue debt, the city may comply fully with the provisions of KRS 424.220 in lieu of the requirements listed in divisions (A) through (I) above.
(KRS 91A.041)
(L) Any city may, when the cost of the newspaper publication exceeds the cost of postage, supplies, and reproduction for the alternative method of publication, in lieu of newspaper publication of advertisement, substitute delivery of a copy of the advertisement by first class mail to each residence within the publication area. Any city electing to use the alternative publication methods authorized by this section shall forward an electronic copy of its audit report or an electronic copy of its financial statement, whichever is applicable, to the Department for Local Government in accordance with KRS 91A.040 and 424.220.
(KRS 424.190(2))
Statutory reference:
Department for Local Government to provide assistance, see KRS 91A.050
(A) The Commission shall designate as the city's official depositories one or more banks, federally insured savings and loan companies, or trust companies within the Commonwealth. The amount of funds on deposit in an official depository shall be fully insured by deposit insurance or collateralized in accordance with 12 U.S.C. sec. 1823, to the extent uninsured, by any obligations, including surety bonds permitted by KRS 41.240(4).
(B) All receipts from any source of city money or money for which the city is responsible, which has not been otherwise invested or deposited in a manner authorized by law, shall be deposited in official depositories. All city funds shall be disbursed by written authorization approved by the Commission which states the name of the person to whom funds are payable, the purpose of the payment and the fund out of which the funds are payable. Each authorization shall be numbered and recorded.
(KRS 91A.060)
(A) Nobody shall cause, promote, aid, assist, encourage, allow or engage in the issuance of a check to the city without maintaining sufficient funds on deposit in the account for the payment thereof.
(B) For each check returned to the city for insufficient funds, there is hereby established a fee of $13.00 for the additional administrative expenses of the city as a consequence thereof, which shall be added to the taxes, fines, fees or penalties for which the returned check was issued.
(Ord. 146(3-24-99), passed 3-24-99)
IMPROVEMENTS
As used in this subchapter, unless the context otherwise requires, the following definitions shall apply:
"ASSESSED VALUE BASIS." The apportionment of cost of an improvement according to the ratio the assessed value of individual parcels of property bears to the total assessed value of all such properties.
"BENEFITS RECEIVED BASIS." The apportionment of cost of an improvement according to equitable determination by the Commission of the special benefit received by property from the improvement, including assessed value basis, front foot basis, and square foot basis, or any combination thereof, and may include consideration of assessed value of land only, graduation for different classes of property based on nature and extent of special benefits received, and other factors affecting benefits received.
"COST." All costs related to an improvement, including planning, design, property or easement acquisition and construction costs, fiscal and legal fees, financing costs, and publication expenses.
"FAIR BASIS." Assessed value basis, front foot basis, square foot basis, or benefits received basis.
"FRONT FOOT BASIS." The apportionment of cost of an improvement according to the ratio the front footage on the improvement of individual parcels of property bears to such front footage of all such properties.
"IMPROVEMENT." Construction of any facility for public use or services or any addition thereto, which is of special benefit to specific properties in the area served by such facility.
"PROPERTY." Any real property benefitted by an improvement.
"SPECIAL ASSESSMENT" or "ASSESSMENT." A special charge fixed on property to finance an improvement in whole or in part.
"SQUARE FOOT BASIS." The apportionment of cost of an improvement according to the ratio the square footage of individual parcels of property bears to the square footage of all such property.
(KRS 91A.210)
(A) The city may not finance any improvement, in whole or in part, through special assessments except as provided in this subchapter and in any applicable statutes. (KRS 91A.200)
(B) Cost of an improvement shall be apportioned equitably on a fair basis.
(C) The city may provide for lump sum or installment payment of assessments or for bond or other long-term financing, and for any improvement may afford property owners the option as to method of payment or financing.
(KRS 91A.220)
Statutory reference:
Improvements; alternate methods, see KRS Ch. 107
The cost of any improvement shall be apportioned on a benefits received basis with respect to any property owned by the state, a local unit of government, or any educational, religious, or charitable organization. The Commission may assess such property in the same manner as for privately owned property or it may pay the costs so apportioned out of general revenues.
(KRS 91A.230)
Before undertaking any improvements pursuant to this subchapter, the city shall prepare a comprehensive report setting out:
(A) The nature of the improvement;
(B) The scope and the extent of the improvement, including the boundaries or other description of the area to be assessed;
(C) The preliminary estimated cost of the improvement;
(D) The fair basis of assessment proposed;
(E) If financing of assessments is provided, the proposed method, including the proposed years to maturity of any bonds to be issued in connection with the improvement; and
(F) Such other information as may further explain material aspects of the improvement, assessments, or financing.
(KRS 91A.240)
After preparation of the report required by § 33.13, the city shall hold at least one public hearing on the proposed improvement at which all interested persons shall be heard. Notice of the hearing shall be published pursuant to KRS Chapter 424, and mailed to each affected property owner by certified mail, return receipt requested, and shall include:
(A) The nature of the improvement;
(B) Description of area of the improvement;
(C) Statement that the city proposes to finance the improvement in whole or in part by special assessment of property and the method to be used;
(D) Time and place the report may be examined; and
(E) Time and place of the hearing.
(KRS 91A.250)
Within 90 days of conclusion of the hearing, the city shall determine whether to proceed with the improvement by special assessments, and if it determines to proceed shall adopt an ordinance so stating and containing all necessary terms, including the items referred to in § 33.13 and a description of all properties. Promptly upon passage the city shall publish such ordinance pursuant to KRS Chapter 424 and shall mail by certified mail to each affected property owner a notice of determination to proceed with the project, the fair basis of assessment to be utilized, the estimated cost to the property owner, and the ratio the cost to each property owner bears to the total cost of the entire project.
(KRS 91A.260)
(A) Within 30 days of the mailing of the notice provided for in § 33.15, any affected property owner may file an action in the circuit court of the county, contesting the undertaking of the project by special assessment, the inclusion of his property in the improvement, or the amount of his assessment. If the action contests the undertaking of the improvement by the special assessment method of the inclusion of the property of that property owner, no further action on the improvement insofar as it relates to any property owner who is a plaintiff shall be taken until the final judgment has been entered.
(B) The city may proceed with the improvement with respect to any properties whose owners have not filed or joined in an action as provided in this section or who have contested only the amounts of their assessments, and the provisions of the resolution are final and binding with respect to such property owners except as to contested amounts of assessments. After the lapse of time as herein provided, all actions by owners of properties are forever barred.
(KRS 91A.270)
(A) After the passage of time for the action provided for in § 33.16, or after favorable final judgment in any such action, whichever comes later, the city may proceed with the improvement or part thereof stayed by the action, including notice requiring payment of special assessment or installment thereon and bonds or other method proposed to finance the improvement. The first installment may be apportioned so that the other payments will coincide with payment of ad valorem taxes.
(B) The amount of any outstanding assessment or installments thereof on any property, and accrued interest and other charges, constitutes a lien on the property to secure payment to the bondholders or any other source of financing of the improvement. The lien takes precedence over all other liens, whether created prior to or subsequent to the publication of the ordinance, except a lien for state and county taxes, general municipal taxes, and prior improvement taxes, and is not defeated or postponed by any private or judicial sale, by any mortgage, or by any error or mistake in the description of the property or in the names of the owners. No error in the proceedings of the Commission shall exempt any benefitted property from the lien for the improvement assessment, or from payment thereof, or from the penalties or interest thereon, as herein provided.
(KRS 91A.280)
The city may undertake any further proceedings to carry out the improvement or any extension or refinancing thereof, except that§ § 33.13 through 33.17 applies if additional property is included in the improvement or if change is made in the method or period of financing; but additional property may be included in the improvement with the consent of the owner thereof without compliance with other sections if it does not increase the cost apportioned to any other property, or any other change may be made without such compliance if all property owners of the improvement consent.
(KRS 91A.290)