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2025-02-26 WS & CC Packet
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2025-02-26 WS & CC Packet
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appointed and three members from the business or civic community. This board <br />is unique in that the three community members do not need to be residents of <br />Centerville. They only need to be part of the business community. <br /> <br />4. Budgeting <br />A budget is not an exact plan. We budget conservatively. We try to set revenues <br />at a level where we have a greater than 50% chance of meeting or exceeding the <br />budgeted amount. We also set expenditures at a level where we have a greater than <br />50% chance of being at or below the budgeted amount. If we do this somewhat <br />accurately, we should experience a modest annual surplus. <br /> <br />This is important because we have a minimum fund balance policy of keeping 40- <br />50% of our annual expenditures and transfers in the General Fund. When our <br />budget increases due to higher costs we also need to have a higher fund balance to <br />stay in the range. The way we get that higher fund balance is by having those small <br />annual surpluses from higher revenues than budgeted and lower expenditures than <br />budgeted. <br /> <br />The reason that fund balance is important is because of the timing of property tax <br />receipts - our revenue source. Property taxes are due at Anoka County by May 15 <br />and October 15 each year. We receive those taxes from the County by early July <br />and December. Any payments that are received between October 15 and the end <br />of December are paid to us at the end of January in the following year. Property <br />taxes are about 87% of our revenue in the General Fund. Since we donÓt get any <br />payment in the first half of the year, we need to have sufficient resources to cover <br />our expenditures until we get our first settlement of the year. Since we get the <br />second half payment in December, our year-end cash balance is at one of the <br />highest points of our budget cycle and we keep dropping cash until we get our next <br />property tax settlement paid in July of the following year. <br /> <br />5. Long-Range Planning <br />We also do long range planning by using both a Capital Improvement Plan (CIP) <br />and Long-Range Financial Management Plan (LRFMP). These plans are generally <br />projected on a 10-year basis. The CIP shows all anticipated capital expenses and <br />revenue sources to pay for those replacements. The LRFMP includes projections <br />for all operating funds of the city and shows anticipated tax levies and cash <br />balances in all funds so the City Council can see the effect of their policy decisions <br />in cold, hard dollars. This has been a very important tool in allowing Centerville <br />to pay cash for projects and equipment and avoid bonding. <br /> <br />6. Financial Reporting <br />We perform interim reporting monthly. This includes a review of revenues, <br />expenses, and cash balances for every fund. We do monthly, quarterly, and annual <br />reporting to various agencies in the state and federal government including the MN <br />Office of the State Auditor for our annual budget and financial report. <br /> <br />8 <br /> <br />
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