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BUDGETARY FINANCIAL POLICIES


Policies reviewed and approved by the City Council are implemented annually to ensure that the City maintains a sound financial position in each of the City's fund and account groups. The policies are long standing and provide guidelines for short and long term decision-making.

Operating Funds Budget Policies

1. The budget should be balanced with appropriations not exceeding current year revenues, transfers-in, and available fund balance reserves.

2. Transfers between funds shall only be permitted to the extent that the basis and justification for the transfer can be quantified.

3. One-time revenues in either operating fund will not be used for funding on-going appropriations. One-time revenues shall only be used to fund capital improvements, capital equipment, or other one-time appropriations.

General Fund Revenue Policies

1. The proposed budget submitted to the City Council will maintain the revenue from the prior year's tax levy in the General Fund while maintaining program and service levels.

2. All new programs or service enhancements shall be implemented according to Council direction, within the base budget. In the event additional revenues are required, a cost benefit analysis of the program change will determine if a new revenue source or increase in existing revenue will be needed. To the greatest extent possible, new or expanded program changes shall be funded through user charges and/or capital recovery fees. The General Fund ad valorem tax rate shall only be raised as a last resort after thorough review of other revenue sources and proposed appropriations.

3. The proposed budget shall maintain a balance in revenue sources to protect the financial stability of the City in the event of severe fluctuation in the national and/or local economy. In this endeavor, the City will strive to have ad valorem taxes, sales taxes, and other taxes and charges for service contribute one-third of the total General Fund revenue.

4. Charges for services shall be reviewed and updated at least every two years to mitigate the effect of any change in fees.



Utility Fund Revenue Policies

1. A cost of service rate study will be conducted each year to mitigate the magnitude of any rate increase necessary for the City to cover the Utility Fund operating budget and meet all revenue bond covenants.

2. Capital improvements required as a result of growth should be paid in part through capital recovery fees that are reviewed and adjusted each year within the requirements of the statute allowing their utilization.

3. Utility Fund revenues are budgeted on the basis of a normal year, not on the basis of forecasted extreme wet or dry years.

Debt Service Revenue Policies

1. The City will issue only long-term debt, and the debt will be used only to fund capital projects that cannot be funded by current revenues.

2. To minimize interest cost on issued debt, the City will structure debt with maturities not to exceed 16 years. Retirement of debt principal will be structured to ensure a level annual debt payment.

3. The debt service of the ad valorem tax rate shall not exceed 40 percent of the total tax rate.

Fund Balance Policies

1. The proposed operating budgets shall be submitted to the City Council with a fund balance reserve of at least 15 percent of recurring operating appropriations.

2. Debt Service Fund balances shall not have a balance that exceeds 15 percent of the general obligation debt outstanding principal. Debt service fund balances in excess of this requirement may be drawn down to be used to reduce ad valorem tax revenue for bond principal and interest payment on existing or new debt.

Operating Fund Expenditures

1. Operating fund expenditures shall be accounted for and budgeted in the five major categories:
      a. Personal Services
      b. Materials and Supplies
      c. Services and Charges
      d. Transfers
      e. Capital Outlay

2. The proposed budget shall appropriate sufficient funds for operations to maintain existing quality and scope of City services.

3. The City will regularly examine programs and services in order to reduce operating cost or enhance service levels without cost increases.

4. Personal service expenditures will reflect the minimum staffing to provide approved quality and scope of City services.

5. The City will provide a competitive compensation and benefit plan to attract and retain quality employees.

6. All categorical appropriations shall be funded to ensure productive personnel, useful capital assets, and a stable level of annual maintenance expenditures.

7. Replacement and approved new capital equipment shall be amortized in the operating department budgets to provide for the replacement of the asset at the end of its expected life. The funds amortized will be transferred each year to the Vehicle and Equipment Capital Replacement Fund.

8. To assist in controlling the growth of operating budgets, operating departments within each operating fund will submit their annual base budget to the City Manager's office that is within an appropriation ceiling calculated by the Finance Department's budget officer. Program or service level changes from the prior budget must be submitted as separate Program Change Requests. The City Manager will incorporate beneficial program changes as much as possible within the base budget presented to the City Council. Unfunded program changes will be presented to the City Council for further consideration.

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