2025-02-26 WS & CC Packet - Laserfiche WebLink

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appointed and three members from the business or civic community. This board is unique in that the three community members do not need to be residents of Centerville. They only need to be part of the business community. 4. Budgeting A budget is not an exact plan. We budget conservatively. We try to set revenues at a level where we have a greater than 50% chance of meeting or exceeding the budgeted amount. We also set expenditures at a level where we have a greater than 50% chance of being at or below the budgeted amount. If we do this somewhat accurately, we should experience a modest annual surplus. This is important because we have a minimum fund balance policy of keeping 40- 50% of our annual expenditures and transfers in the General Fund. When our budget increases due to higher costs we also need to have a higher fund balance to stay in the range. The way we get that higher fund balance is by having those small annual surpluses from higher revenues than budgeted and lower expenditures than budgeted. The reason that fund balance is important is because of the timing of property tax receipts - our revenue source. Property taxes are due at Anoka County by May 15 and October 15 each year. We receive those taxes from the County by early July and December. Any payments that are received between October 15 and the end of December are paid to us at the end of January in the following year. Property taxes are about 87% of our revenue in the General Fund. Since we donÓt get any payment in the first half of the year, we need to have sufficient resources to cover our expenditures until we get our first settlement of the year. Since we get the second half payment in December, our year-end cash balance is at one of the highest points of our budget cycle and we keep dropping cash until we get our next property tax settlement paid in July of the following year. 5. Long-Range Planning We also do long range planning by using both a Capital Improvement Plan (CIP) and Long-Range Financial Management Plan (LRFMP). These plans are generally projected on a 10-year basis. The CIP shows all anticipated capital expenses and revenue sources to pay for those replacements. The LRFMP includes projections for all operating funds of the city and shows anticipated tax levies and cash balances in all funds so the City Council can see the effect of their policy decisions in cold, hard dollars. This has been a very important tool in allowing Centerville to pay cash for projects and equipment and avoid bonding. 6. Financial Reporting We perform interim reporting monthly. This includes a review of revenues, expenses, and cash balances for every fund. We do monthly, quarterly, and annual reporting to various agencies in the state and federal government including the MN Office of the State Auditor for our annual budget and financial report. 8