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Home My WebLink About026605 RES - 01/10/2006RESOLUTION REAFFIRMING FINANCIAL POLICIES ADOPTED BY RESOLUTION NO. 023319, PROVIDING POLICIES FOR MAINTENANCE OF THE GENERAL FUND BALANCE AT AN ADEQUATE LEVEL, AND PROVIDING POLICY DIRECTION ON PREPARATION OF THE FY 06- 07 BUDGET WHEREAS, the City of Corpus Christi has a commitment to citizens as expressed in its Mission Statement: "The City of Corpus Christi is dedicated to delivering responsive services that address our diverse community's needs and enhance the quality of life in our All- America City. We will accomplish this through fiscal discipline, continuous improvement, straight - forward communications, wise stewardship of resources and excellent customer service. "; and WHEREAS, financial resources are budgeted to fulfill this commitment; and WHEREAS, it has been the City's goal to rebuild the General Fund balance to acceptable levels, a goal which was expressly stated in past policies with targets for accomplishing that goal; and 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; reaffirmed the Financial Policy in May 2002 by Resolution No. 024863; reaffirmed the Financial Policy in April 2003 by Resolution No. 025280; reaffirmed the Financial Policy in April 2004 by Resolution No. 025737; and reaffirmed the Financial Policy in May 2005 by Resolution No. 126265; and WHEREAS, as a result of those policies, the City has achieved its goal for the General Fund balance and desires now to articulate a strategy to maintain that balance and to utilize any surplus balances to provide for enhanced financial stability in future years; and WHEREAS, this policy provides an essential guide to direct financial planning and to maintain and strengthen the City's bond rating; and WHEREAS, it has been the City's practice to reaffirm its financial policy or to adopt new /modified 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: Budget Policy Res Redraft 1 026n5 2 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 FY2006 -07 proposed budget in 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 maintain a reserve in the General Fund unreserved fund balance which totals at least ten (10 %) percent of total annual General Fund appropriations . The City Manager shall report on the status of compliance with this ten (10 %) percent policy at least annually as part of the budget process. Undesignated fund balance in excess of the 10 percent policy requirement may be recommended for expenditure on one -time improvements, with a priority on infrastructure and equipment which will reduce the need for future debt. Such expenditures shall be subject to the normal appropriations and expenditure approval process applicable to all other funds. Finally, it is noted that extraordinary 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 to the City Council as soon as the information Is known SECTION 4. Property Tax Rate for Operations and Maintenance. The Proposed Budget for FY 06 -07 shall be prepared assuming that the City will maintain the "effective tax rate" for maintenance and operations. That is the rate which only generates new revenue from new growth /improvements added to the roll and not from any change in value due to changes in value. Funding requirements for Reinvestment Zone No. 2 (Packery Channel) are specifically exempted from this policy. SECTION 5. Priority of City Services. The City Council recognizes the need to provide public services which support the continued growth of the local economy and personal income growth to insure an adequate financial base for the future. Priority for funding in the coming five years (FY 07- FY11) should be on improvements in public safety services (Police, Fire and EMS) consistent with strategic plans for those services and for infrastructure maintenance and repair. Every effort should be made to provide for such improvements without reducing current services in other areas. SECTION 6. Operating Contingencies. The City Manager is directed to budget at least $200,000 per year as an operating contingency as part of General Fund Budget Policy Res Redraft doc 3 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 7. 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 8. 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 9. 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 10. 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 SECTION 11. 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 12. 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 13. 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. Budget Policy Res Redraft doc 4 SECTION 14. 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. Short-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. Armando Chapa City Secretary APPROVED: January 5, 2006. Lisa Aguilar Assistant City Attorney for City Attorney Budget Policy Res Redraft.doc THE CI ' OF CORPUS CHRISTI H Mayor Garre Corpus Christi, Texas I o day of �� 2006 1 TO THE MEM:ERS OF THE CITY COUNCIL Corpus Christi, Texas For the reasons set forth in the emergency clause of the foregoing ordinance an emergency exists requiring suspension of the Charter rule as to consideration and voting upon ordinances at two regular meetings: I /we, therefore, request that you suspend said Charter rule and pass this ordinance finally on the date it is introduced, or at the present meeting of the City Council. Respectfully, Respectfully, Henry Garrett Mayor Council Members The above ordinance was passed by the following vote: Henry Garrett Brent Chesney Melody Cooper Jerry Garcia Bill Kelly Rex A. Kinnison John E. Marez Jesse Noyola Mark Scott