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Budgeting 101: A Comprehensive Introduction to City Budgeting Processes

Dive into the essentials of budgeting with our engaging introduction to city financial management. This session covers key elements such as budget definitions, fund structures, revenue and expenditure overviews, and the intricacies of forecasting. Learn how to balance general funds and special revenue while understanding the art and science behind budget management. Participants will gain insight into operational expenses, key drivers, and the importance of fund balances. Join us for interactive exercises that illuminate the complexities of creating and maintaining a city budget.

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Budgeting 101: A Comprehensive Introduction to City Budgeting Processes

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Presentation Transcript

  1. BUDGETing101 An Introduction to Budgeting

  2. I • Introducin

  3. Agenda • Welcome and Introductions • Budget and Fund Overview • Game Time! • Understanding the General Fund • Revenue and Expenditure Overview • BREAK – 10 Minutes • Key Drivers of Expenses • The Mysteries of Forecasting • Fund Balances and Reserves • Budget is an Art and Science • Can you Juggle? • Resources • Summary

  4. Introducing the New Budget Math • Ma and Pa Kettle Style

  5. August 18, 1990

  6. August 18, 1990 August 14, 1990 What is a Budget? • Serves as a Financial Plan and Guide • Reflects the Numerical Representation of Council Priorities and Goals • Establishes Funding Levels for City Services

  7. Budget at a Glance

  8. What’s a Fund Anyway? The budget is made up of several types of “funds” or “piggy banks” for different types of revenue and expenses: • General Fund • Special Revenue Fund • Debt Service Fund • Capital Project Fund • Enterprise Fund • Internal Service Funds • Trust and Agency Funds

  9. City of Tracy Fund Structures

  10. Government Funds General Fund • Chief operating fund - main City “checking account” • Repository for most general tax revenue and operating expenses Special Revenue Funds • Accounts for revenues, restricted for a particular purpose • Landscape Maintenance District Assessment • Community Development Block Grant (CDBG) • Gas Tax

  11. Government Funds Debt Services Funds • Payment of principal/interest on long term debt • COPS for Regional Mall • Community Facilities and Assessment Districts • Lease Revenue Bonds to refinance COP debt Capital Project Funds • Used for acquisition, construction, and infrastructure improvements • General Fund 301 - fire station, animal shelter • Infill Development Funds • New Area Development Funds

  12. Government Funds Internal Service Funds • Used for goods and services to support departments • Costs recovered through user charges • Equipment Replacement; Building Maintenance; Central Garage • Information Systems; Risk Management Fiduciary Funds • Regional Transportation Impact Fund • Post-Employment Benefit Trust Fund • Agency Debt Funds • Enterprise Funds • Water Fund • Airport Fund • Transit fund

  13. General Fund is like a Checkbook Personal Income Monthly Expenses Mortgage Food Utilities Credit Cards Home Maintenance • Paycheck • Rental Income • Bank Interest

  14. City Checkbook: $52M General Fund Sources of Revenue Operating Expenses Salary & Benefits Materials & Supplies Utilities Vehicle & Building Maintenance Debt Service • Property & Sales Tax • Special Assessments • Franchise Fees • Enterprise Charges • License & Permits • Fees & Fines • Grants and Reimbursements

  15. General Fund Revenue GF Revenue: $52M

  16. Did You Know? Sales Tax 1 cent for every 8.5¢ of sales tax paid per dollar Property Tax 10-15 cents for each property tax dollar paid Tracy Measure E Sales Tax 1/2 cent for every 8.5¢ of sales tax paid per dollar

  17. General Sales Tax History

  18. Property Tax Revenue History

  19. General Fund Operating Expenses

  20. Break – 10 Minutes

  21. Key Drivers of GF Expenses • Salaries • Healthcare Costs • Affordable Care Act (ACA) • Employer PERS Rates • State Takeaways • Service/Contract Inflationary Increase

  22. Forecasting is an Art & Science

  23. 5-Year Forecast

  24. Planning for the Future Home Budget GF Budget Revenue – Expenditures = $ Available for Fund Balance Income – Expenses = $ Available for Future Savings • Rainy Day • College • Home Improvements • Retirement Economic Downturns Capital Projects Unexpected Expenses

  25. What’s a Fund Balance Anyway? • Fund Balance is the difference between fund assets and liabilities, or the City’s total net assets • Not all of net assets are available for use. Some are legally restricted for a specific purpose, while others are unassigned. • There are 5 components of fund balance: $27.7M + CONSTRAINED --

  26. It’s All About Juggling Internal Juggling • Revenues vs. Expenditures • Short Term vs. Long Term • One Time vs. Ongoing • Operating vs. Capital • Administration vs. Services • Management vs. Staff (& Unions) • Department vs. Department • Public Safety vs. Everything Else • Quality vs. Efficiency

  27. And More Juggling • External Juggling • Economy • Council Priorities • Community Pressure/Wants • Other Governments (State, County, Cities) • Media

  28. The Art and Science of: Juggling Budgeting • Physics • Perception • Dynamics • Courage • Math/Statistics • Forecasting • Accounting • Decisions

  29. Can You Juggle? • Budget Basics Exercise Purpose: • This exercise is designed to help participants understand the fiscal and policy implications associated with developing a City budget—it ain’t all that easy!

  30. Questions & Answers(Maybe)

  31. Resources

  32. Summary We Learned that a City Budget: • Is a Numerical Representation of the Council and Community’s Goals and Priorities • Is Guided by a Financial Plan, known as the 5-Year Forecast • Has 3 Components: Operating, Capital, Debt Service Budgets • Consists of a lot Funds!

  33. Summary We Learned that the General Fund is like the City’s Personal Checkbook: • It’s monthly income comes from mostly Sales and Property Tax and Measure E Revenue. • It’s monthly expenses are Salaries and Benefits, including Healthcare and PERS costs. We learned that reserves make up the City’s fund balance.

  34. Summary And last, we learned that: Budgeting is like juggling—it is an Art and a Science that requires the management of a variety of internal and external pressures.

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