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HomeMy WebLinkAbout028609 RES - 08/15/2010RESOLUTION AMENDING FINANCIAL POLICIES ADOPTED BY RESOLUTION 028176 AND PROVIDING FINANCIAL POLICY DIRECTION ON PREPARATION OF THE FY 2010-11 BUDGET. WHEREAS, the City of Corpus Christi has a commitment to citizens as expressed in its Mission Statement: "Provide exceptional service to enhance the quality of life"; 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 026265; and reaffirmed the Financial Policy in January 2006 by Resolution 026605; amended the Financial Policy in April 2008 by Resolution 027683; and amended the Financial Policy in May 2009 by Resolution 028176; 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 balance 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 or 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: The Financial Polices adopted by Resolution 028176 are amended to read as follows: "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 FY 2009 10 FY 2010-11 H:\LEG-DIR\Lisa\2010 Resolutions \2010-11 Budget Policy Resolution.doc 028609 INDEXED 2 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 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. At the end of each fiscal year, upon completion of the Comprehensive Annual Financial Report, the amount calculated to be 10% of total annual General Fund appropriations will be designated as Reserve for Major Contingencies, and set up in a separate account. The remaining balance in the unreserved fund balance will be considered excess, and available for use in accordance with this section. 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 ten percent policy requirement may be recommended for expenditure on one-time improvements, deferred maintenance, lifecycle replacement, and/or capital items with a priority on infrastructure and equipment which will reduce the need for future debt or avoid future maintenance costs. 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 2009 10 2010-11 shall be prepared assuming that the City will be adopting a tax rate necessary to be in compliance with Section 2 above. Full consideration will be given to maintaining the "effective tax rate" for maintenance and operations. "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. "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 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, internal service and special revenue funds of the City. H:\LEG-DIR\Lisa\2010 Resolutions\2010-11 Budget Policy Resolution.doc 3 "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. Whereas many of the City's fiscal goals require commitment and discipline beyond the one year considered within the City's fiscal year, the City will also consider adoption of action plans necessary for the accomplishment of City short term or long term goals. These action plans will be presented and recommended to the City Council in the proposed annual operating budget and shall be used for development of future budget recommendations as necessary to accomplish these goals. 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. In order to meet the requirements outlined in Sections 2 and 4, every effort will be made to base rates on a cost of service model so costs incurred for certain services are paid by the population benefiting from such services. "Section 9. Interfund Transfers. The City may recover costs in the General Fund by charging other funds for administrative costs incurred to support their operations. The City may also transfer funds from the Utility funds (Water, Wastewater, Gas and Stormwater) in an amount not to exceed 7% of the three-year average revenues for the respective utility, calculated using the current year estimate and the previous two years' actual revenues taken from the City's Comprehensive Annual Financial Report. Consideration will first be given to utilization of excess fund balances in the utility funds. "Section 910. 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 4-011. 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 14 12. Debt Management. The City Manager shall adhere to the Debt Management Policy adopted by Resolution 028003 028441 adopted by the City Council on December 16, 2008 December 15, 2009. "Section 1-2 13. Capital Improvement Plans/Funding. The annual Capital Improvement Plan shall follow the same cycle as the Operating Budget. 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 H:\LEG-DIR\Lisa\2010 Resolutions\2010-11 Budget Policy Resolution.doc 4 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. "Section 4-3314. Expenditures. Within the limitation of public service needs, statutory requirements and contractual commitments expenditures included in the operating budget shall represent the most cost efficient method to deliver services to the citizens of Corpus Christi. Efforts to identify the most cost efficient method of service delivery shall continue during the fiscal year after the operating budget is adopted and may be implemented during the fiscal year as necessary and of benefit to the public. "Section 15. Zero Based Budgeting process. To prepare the General Fund operating budget, the City shall utilize the Zero Based Budgeting process. The staff shall be accountable for utilizing the Zero Based Budgeting process comprehensively for all General Fund department budgets. Consideration may be given to expanding the Zero Based Budgeting process to Non -General Fund Departments if deemed appropriate by the City Manager." Armando Chapa City Secretary APPROVED: May 13, 2010 Lisa Aguila Assistant City Attorney for City Attorney THE CITY OF CORPUS CHRISTI Joe Mame Mayor H:\LEG-DIR\Lisa\2010 Resolutions\2010-11 Budget Policy Resolution.doc Corpus Christi, Texas r of , 2010 The above resolution was passed by the following vote: m11J Joe Adame Chris N. Adler Brent Chesney Larry Elizondo, Sr. Kevin Kieschnick Priscilla G. Leal John E. Marez Nelda Martinez Mark Scott 028609