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HomeMy WebLinkAbout025280 RES - 04/29/2003RESOLUTION REAFFIRMING AND AMENDING FINANCIAL POLICIES ADOPTED BY RESOLUTION NO. 023319 AND PROVIDING A POLICY TO MAINTAIN THE FUND BALANCE FOR 'tHE GENERAL FUND AT AN ADEQUATE LEVEL WHEREAS, the City of Corpus Christi has a commitment to citizens as expressed in its Mission Statement: "Our Mission is to provide the citizens of Corpus Christi, collectively, excellent quality products and highly responsive services in the areas of: Infrastructure Needs (including water, wastewater, gas distribution, solid waste, aviation and streets); Protective Services (including law enforcement, fire and health); Quality of Life Enrichment (including housing and community development, libraries, cultural and leisure activities); Economic Development (including support of existing economic bases and encouragement of growth); and Development Services (including engineering, planning and inspection...)"; and WHEREAS, financial resources are budgeted to fulfill this commitment; and WHEREAS, it is prudent to adopt financial policies and actions to rebuild General Fund ending balances to acceptable levels and ensure that those levels are maintained in future years; WHEREAS, the City Council adopted a Financial Policy in January 1997 by Resolution No. 022828, reaffirmed the Financial Policy in June 1997 by Resolution No. 022965, modified the Financial Policy in July 1997 by Resolution No. 022992, adopted a new Financial Policy in May 1998 by Resolution No. 023319; reaffirmed the Financial Policy in May 1999 by Resolution No. 023657; reaffirmed the Financial Policy in May 2000 by Resolution No. 024044; reaffirmed the Financial Policy in May 2001 by Resolution No. 024455; and reaffirmed the Financial Policy in May 2002 by Resolution No. 024863; WHEREAS, this policy provides an essential guide to direct financial planning and to maintain and strengthen the City's bond rating; and WHEREAS, Resolution No. 023319 requires City Council to reaffirm the financial policy annually in conjunction with preparation of the budget. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. Development/Effective Date of Financial Policy. This Financial Policy reaffirms and amends the financial policies adopted by each year by the City Council since 1997. This Financial Policy is made part of the City Comprehensive Policy Manual. The City Manager is directed to prepare the FY2003-04 proposed budget in Financial Policies.doc accordance with this policy. The City Council is prepared to make expenditure reductions that may be necessary to comply with this policy. SECTION 2. Current Revenues Equal/Exceed Current Expenditures. Current General Fund operating revenues will equal or exceed current budgeted expenditures. SECTION 3. Fund Balance Reserve/Working Capital. To ensure that current and future services or operations are not severely impacted by any economic slowdowns, emergencies, natural disasters or other unforeseen circumstances, adequate financial resources will be set aside in the General Fund unreserved fund balance. Accordingly it is the goal of the City Council to build and maintain a reserve in the General Fund unreserved fund balance which totals at least ten (10%) percent of total annual General Fund appropriations, excluding anticipated reimbursements and inter-fund transfers, within five years. The City Manager shall report on the progress toward achievement of this ten (10%) percent goal at least annually as part of the budget process. Unique situations may arise in which the timing of external actions out of the City's control may require the use of the funds in the reserve. The City Manager shall note these situations in the budget and in financial reports presented to the City Council on a quarterly basis. SECTION 4. Operating Contingencies. The City Manager is directed to budget at least $200,000 per year as an operating contingency as part of General Fund expenditures in order to further insulate the General Fund unreserved fund balance from unforeseen circumstances. The City Manager is directed to budget similar operating contingencies as expenditures in enterprise and special revenue funds of the City. SECTION 5. Multi-Year Financial Forecasting, The City will maintain a five~year financial plan for the General Fund to anticipate potential budget imbalances and unfavorable revenue or expenditure trends, thus allowing for the identification of budgetary gaps long before they develop into fiscal crises. The City shall also maintain business plans and/or rate models for enterprise operations. SECTION 6. Revenue Enhancement. The City shall attempt to pursue and maintain a diversified and stable revenue stream for the General Fund in order to shelter finances from short term fluctuations in any one revenue source. SECTION 7. Quarterly Financial Reporting and Monitoring. The City Manager shall provide interim financial performance reports and updates to the City Council on a quarterly basis. These interim reports must include detailed year to date revenue and expenditure estimates, as well as explanations for major variances to budget. The format of the quarterly report must be relatively consistent with the adopted budget. SECTION 8. Use of Nonrecurring Revenue. The City shall endeavor to use nonrecurring revenue to fund one-time expenditures. Nonrecurring revenue may include items such as sale of fixed assets, court settlements, or revenue collection windfalls. Financial Policies.doc 3 SECTION 9. Debt Affordability Reviews/Disclosure Practices. The City Manager shall maintain strong debt management practices as evidenced by types and methods of financing approved by the City Council. Debt affordability reviews will consider overall exposure between invested assets and external debt issuance. Debt disclosure will include measures beyond the standard audited financial statements and publications. These measures must incorporate disclosure of material events impacting the financial status of the City. Additional financial report disclosures will go beyond GASB 34 requirements and may include supplementary information sections and data on demographics and other key statistics. SECTION 10. Debt Service Fund Balance. In order to provide additional financial security, the General Obligation Debt Service Fund will maintain an acceptable level of fund balance to cover a substantial portion of the subsequent year principal and interest debt obligation. SECTION 11. Debt Retirement Practices. The City shall not issue debt for a term that exceeds the useful life of the asset or project being financed. In assessing the desirability to refund existing debt, the City shall use a benchmark of at least three percent (3 %) net present value savings. The City shall not refund debt for a period beyond original maturity dates. SECTION 12. Capital Improvement Plans/Funding. As part of the annual capital budget process, the City shall update its short and long range capital improvement plans. For the three-year short term plan, projects include any projected incremental operating costs for programmed facilities. The long range plan extends for an additional seven years, for a complete plan that includes ten years. Shod-term plan projects must be fully funded, with corresponding resources identified. As part of a concerted effort to reduce debt levels and improve financial flexibility, the City shall pursue pay-as-you-go capital funding where possible. ATTEST: Armando Chapa City Secretary THE CITY OF CORPUS CHRISTI APPROVED: 24th day of April, 2003. Lisa Aguilar ~ Assistant City Attorney for City Attorney Financial Policies.doc Brent Chesney Javier D. Colmenero Melody Cooper Henry Garrett Bill Kelly Rex A. Kinnison Jesse Noyola Mark Scott Corpus Christi, Texas ay of ' ,20 The above resolution was passed by the following vote: Samuel L. Neal, Jr.