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City u r psjLib 1 City of Roseville — 2006 Budget Operating Budget Policy Purpose The purpose of the City's Operating Budget Policy is to ensure that the City's annual operating expenditures are based on a stable stream of revenues. The policies are designed to encourage a long -term perspective to avoid pursuing short-term benefits at the expense of future problems. The policies will enable a stable level of services, expenditures, and property tax levies. Scope These policies apply most critically to those programs funded through the property tax, because it is most difficult to deal with fluctuations in this revenue source. Polic ❑ The City will pay for all current expenditures with current revenues. The City will avoid budgetary procedures that balance current expenditures at the expense of meeting future years' expenses. Specifically, accruing future year's revenues shall be prohibited. Practices to be avoided include postponing expenditures, rolling over short -term debt, and using reserves to balance the operating budget ❑ The budget will provide for adequate maintenance of capital plant and equipment, and for their orderly replacement ❑ A proportionate share of the administrative and general government costs incurred by the general operating fund of the City shall be borne by all funds as is practicable. Such administrative charges shall be predetermined and budgeted annually ❑ New programs or proposals shall be reviewed in detail by City staff and both a policy and fiscal analysis shall be prepared prior to budgetary inclusion, and provided to the City Council for its review ❑ A request for a program or service expansion or reduction must be supported by an analysis of public policy implications of the change ❑ A request for new personnel must be supported by an analysis demonstrating the need for the position based on workload measures, comparative staffing levels, and department priorities ❑ A request for purchase of new (additional) capital equipment must be supported by a net present value analysis demonstrating the present value of the benefits of the equipment is greater than the cost of the equipment over the expected life of the equipment The City has become more dependent on local government aid in recent years as the state has controlled local levies and replaced them with increased local government aid. This has replaced a more stable revenue source (property taxes) with a less stable one. One way to deal with this instability is to develop a budget reserve that can be used if local government aid is significantly reduced without adequate notice. ❑ The City will maintain a budgetary control system to ensure adherence to the budget. ❑ The Finance Department will prepare regular reports comparing actual expenditures to budgeted amounts as part of the budgetary control system. ❑ Department heads shall be primarily responsible for maintaining expenditures within approved budget guidelines that are consistent with approved financial policies. 113