BUDGET PROCESS 

BUDGET PREPARATION 

The preparation of a budget is a complex process.  The process affords both an interesting and challenging opportunity to reassess our plans and overall goals and means for accomplishing them.  It is through this effort that the budget is the single most important policy document produced each year. 

Preparation of the budget begins in mid-January, with projection of City reserves and revenues and what the City can afford.  At that time, the Department Heads are asked to estimate their expenditures for the remainder of the current year, and submit their requests for the coming year to the City Administrator/Recorder.  The City Administrator/Recorder meets with the Mayor and the Department Heads to review, revise and balance the budget. Capital improvement projects are analyzed to ensure that they conform with the City's Five-Year Capital Improvement Program, the City Council's Policy Goals and Objectives, the City's Budget and Financial Policies and the City's Comprehensive Plan. 

BUDGET ADOPTION 

The Budget Committee, composed of an equal number of qualified electors and the City Council, meets publicly to review the budget document as proposed by the budget officer. Public hearings are conducted to obtain taxpayer comment, and publications in newspapers are required.  The Budget Committee reviews the proposed budget and either revises the proposed figures or approves them as presented. 

The budget or a detailed summary describing the budget, as approved by the Budget Committee, is then published in a newspaper of general circulation in summary form, and the full document is made available during regular business hours at City Hall for public inspection.  Prior to June 30, an advertised public hearing is held before the City Council to consider the proposed budget as approved by the Budget Committee.  Then the City Council legally enacts the budget by passage of a resolution.  The budget is adopted on a basis consistent with generally accepted accounting principles, and appropriations lapse at the end of each fiscal year. 

BUDGET AMENDMENTS 

It occasionally becomes necessary to make changes to the adopted budget.  There are two methods by which Oregon State Budget Law allows the City's budget to be updated in the case of unforeseen circumstances.  

The first method is to transfer budgeted amounts within a fund.  These transfers usually involve transfers between major categories within a department, or transfers between departments within a fund.  Transfers do not result in overall budget appropriation increases.  Transfers are usually initiated by the City Administrator/Recorder upon a recommendation from a Department Head, and must be adopted by resolution of the City Council. 

The second method results in a change in the total budget appropriations.  The City Council may authorize supplemental appropriations during the year by adopting a supplemental budget.  Examples of changes that would require the supplemental budget process are as follows: 

• The re-appropriation of monies from one fund to another;

• The appropriation of unanticipated grant funds;

• The appropriation of proceeds from the sale of property which necessitates the immediate purchase, construction or acquisition of different facilities. 

The supplemental budget process requires public hearings, newspaper publications and approval by the City Council.

DESCRIPTION OF BASIS OF ACCOUNTING AND BUDGETING 

Basis of accounting and budgeting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements.  Basis of accounting relates to the timing of the recognition of transactions and events.  The City’s budgetary basis of accounting is the same basis of accounting used to prepare its financial statements, with the exception of depreciation expense. 

All Governmental Funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when they become measurable and available.  In order for a revenue to be measurable and available, it must be collectible within the period or soon enough afterwards to be used to pay liabilities of the current period.  Revenues accrued under this basis include charges for services, investment income, intergovernmental grants, and intergovernmental revenues.  Property tax revenues, licenses and permits and fines are considered measurable when in they reach the hands of the City or its collection agency.  Liens and delinquent property taxes which, although measurable, are not available to finance current operations, are recorded as deferred revenue. 

Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred, except that principal and interest on general long-term debt is recognized when due. 

The Proprietary Funds are accounted for using the accrual basis of accounting.  Their revenues are recognized when they are earned, and their expenses are recognized when they are incurred. 

DEFINITION OF A BALANCED BUDGET 

The City shall annually adopt a balanced budget in which planned funds available equal planned expenditures, yet operating revenues are equal to, or exceed, operating expenditures.  To the extent feasible, one-time revenues will not be used to finance ongoing operations.  Contingency appropriations in the General Fund, Street Fund, Water Fund and Sewer Fund shall be equal to at least 10 percent of the City's operating expenditures.  Reserves shall be built to provide for future capital improvements.

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