The budget document is a jurisdiction's most important reference document. Budgets record policy-decision outcomes, cite policy priorities, as well as program objectives and delineate government's total service effort.
A budget has four basic dimensions. First, it is a political instrument that allocates public resources among social and economic needs of the jurisdiction. Second, a budget is a managerial and/or administrative instrument. Third, a budget is an economic instrument that can direct a city's economic growth and development. Fourth, a budget is an accounting instrument that holds government officials responsible for the expenditure of the funds with which they have been entrusted.
Terminology & Budget Summaries
The terminology that accompanies local government can be very confusing. This section of the budget is intended to aid the average reader to better understand this document. A glossary is also included at the end of this section.
The budget document has been organized to make it easy for all users to find information. A budget summary immediately follows this section. It contains highlights of each of the more detailed budget sections.
The actual government of the city is broken into three fund types: General Fund, Special Revenue Funds, and Proprietary Funds. There are five fund groups, which are distinct from one another by the function that they serve. The five fund groups are:
- Debt Service Funds
- Enterprise Funds
- General Fund
- Internal Service Funds
- Special Revenue Funds
Within these major fund categories are individual funds, which are designed for specific purposes. Some funds are broken down still further into departments, which have major objectives. Departments may be broken down further is a unique function is being served by one portion of that department's budget. For example, in the General Fund, one of the departments is Police and a division of the Police Department is patrol and traffic.
Each fund has revenue and an expenditure side. Revenues identify the sources of money that it takes to operate each fund and the departments within that fund are derived. Property taxes or ad valorem taxes are used only in the General Fund, Special Revenue Funds, and Debt Service Fund.
Most departments receive the bulk of their funds from the General Fund. (The General Fund is often referred to as the operating fund because almost all city services are accounted for in this fund.)
Format for Budget Expenditures
On the expenditure side, there are five categories of expenditures listed. These categories are meant to be general rather than specific. The five categories are personal services, materials and supplies, contractual services, other charges, and capital outlay.
- Personal services are payroll / compensation including salaries, car allowance, overtime, longevity, employers' social security, employer's Medicare, and employers' pension. (It does not include insurance fringe benefits, which is included on a separate line item.)
- Materials and supplies are intended for the purchase of office supplies, operating supplies, etc. from pens and paper to lumber, fertilizer, pipe, and utilities.
- Contractual services are used for postage, printing, telephones, travel, equipment repairs, maintenance contracts, etc.
- Other charges identifies miscellaneous expenses and expense reimbursements from outside sources.
- Capital outlay is for the purchase of equipment over $5,000 and has a life greater than one year.
In the case of departments, which "charge" other departments a fee for providing certain services, this fee is not included as revenue. It is rather, included as a credit (subtraction) from the expenditure account. The reason for this is that intergovernmental transfers such as these cannot be counted as true revenue.