City of La Porte Operating Budget 1998-1999

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I I I I I I I I I I I I I I I I I - - . GENERAL BUDGET INFORMATION, PLAN AND PROCESS INTRODUCTION The city budget is a planning document for the use of financial resources during the fiscal year. The City of La Porte is a complex organization providing a wide range of services to its residents, customers and visitors. City resources annually exceed $35 million. As with any large organization that provides a mixture of services, planning and management of financial resources are vital to the City. With increasing financial requirements of the School District, State and Federal governments on our citizens, it becomes even more important for the City to adequately plan and manage the use of its financial resources. BASIS OF ACCOUNTING The basis of accounting is the method by which revenues and expenditures or expenses are recognized. The accounting treatment applied to a fund is determined by its measurement focus. All governmental type funds are accounted for using a current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual (Le. both measurable and available). Expenditures are recorded when the related fund liability is incurred, if measurable, except for unmatured interest on general long-term debt which is recognized when due, and compensated absences which are recognized when the obligations are payable from currently available financial resources. All proprietary fund types are accounted for on a flow of economic resources measurement focus and use the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when they are incurred. BASIS OF BUDGETING Our budget process is based on a working capital approach and budgets are adopted on a basis consistent with generally accepted accounting principals. Working capital is defined as the amount by which total current assets exceed total current liabilities. It is used to balance the budget as long as it does not have a negative impact on that particular fund. Annual appropriated budgets are adopted for the general and debt service funds. All annual appropriations lapse at fiscal year end. Project length financial plans are adopted for all capital projects funds. Encumbrances represent commitments related to unperformed contracts for goods or services and lapse at year end. However, encumbrances generally are reappropriated as part of the following year's budget. Prior to September 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing on the following October 1. The operating budget includes proposed expenditures and the means of financing them. A public hearing is conducted to obtain taxpayer comments. Prior to September 30, the budget is legally enacted through passage of an ordinance. Additional information on these procedures is available on page 1-17. The City Manager must approve changes within a department, which is the legal level of control. City Council approves changes between departments as well as amends the budget during the year as may be required. The legal level for expenditure (expense) budget control is the Fund level. Each Department Director is responsible for the budget in their respective departments. Formal budgetary integration is employed as a management control device during the year for the General Fund and Enterprise Funds. 1-15