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HomeMy WebLinkAboutO-1992-1828 . i ORDINANCE NO. ~ AN ORDINANCE ADOPTING THE CITY OF LA PORTE FINANCIAL MANAGEMENT POLICY DATED MARCH 23, 1992; PROVIDING A SEVERABILITY CLAUSE; FINDING COMPLIANCE WITH THE OPEN MEETING LAW; AND PROVIDING FOR AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby adopts the "City of La Porte Financial Management Policy" dated March 23, 1992, a true and correct copy of which is attached to this Ordinance as Exhibit "A", incorporated by reference herein, and made a part hereof for all purposes. Section 2. If any section, sentence, phrase, clause, or any part of any section, sentence, phrase, or clause, of this Ordinance of the City of La Porte Financial Management Policy Manual hereby adopted, shall for any reason, be held invalid, such invalidity shall not affect the remaining portions of this Ordinance, or said Financial Management Policy Manual, and it is hereby declared to be the intention of this City Council to have passed each section, sentence, phrase or clause, or part thereof, irrespective of the fact that any other section, sentence, phrase or clause, or part thereof, may be declared invalid. Section 3. The City Council officially finds, determines, recites and declares that a sufficient written notice of the date, hour, place and subject of this meeting of the City Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meeting Law, Article 6252-17, Texas Revised Civil Statutes Annotated; and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 4. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED this the 23rd day of March, 1992. By ATTEST. ~ (lbAA~.J . Cherie Black, City Secretary AP~dd Knox W. Askins, City Attorney . City of La Porte, Texas Financial Management Policy Adopted by the City Council of the City of La Porte on March 23, 1992, by Ordinance No. lids . City of La Porte, Texas Robert T. Herrera City Manager Jeff Litchfield, CPA, CGFO Director of Finance . . CIlY OF LA PORTE, TEXAS FINANCIAL MANAGEMENT POLICIES The City of La Porte Financial Management Policies provide a basic framework for the overall fiscal management of the City. The policies represent a foundation to address changing circumstances and conditions, and assist in the decision making process. The financial policies represent guidelines for evaluating both current activities and proposals for future programs. The Financial Management Policies reflect long-standing principles and practices which have enabled the City to maintain its financial stability. It is intended that the policies be reviewed annually so that the guidelines represent a realistic, current framework for public policy decisions. Policy statements are included for the following areas: Operating Budget Policies Revenue Policies Reserve Policies Debt Policies Capital Budget P9licies Accounting Policies Investment Policies . . Table of Contents 1. Operating Budget Policies Balanced budget Borrowing for operating expenditures (expenses) Performance evaluation Budgetary controls Self-supporting enterprises Service planning Contingencies GFOA Distinguished Budget Presentation Award 2. Revenue Policies Revenue structure Revenue collection Sources of services financing Tax base capacity User fees Cost of service Policy and market considerations Bi-annual review Non-resident charges Water and sewer rates Internal service fees Donated revenues Administrative transfers Flat fee transfers, Transfer from Golf Course Fund Transfer from Commercial Solidwaste Fund 3. Reserve Policies Operating funds Debt service fund 4. Debt Policies General obligation bonds or certificates of obligations Revenue supported bonds Debt management Bond term 5. Capital Budget Policies Capital improvement program Operated budget impacts Repair and replacement 6. Accounting Policies Accounting standards Annual audit GFOA Certificate of Achievement Award 7. Investment Policies . . Financial Management Policies 1. Operating Budget Policies The objectives of the operating budget policies is to maintain adequate service levels at reasonable costs by following sound financial management practices. Balanced budget The operating budget shall be ,balanced. For each fund, ongoing costs shall not exceed ongoing revenues plus available working capital balances in accordance with the Reserve Policies listed in Section 3. Borrowing for operating expenditures (expenses) The City shall not use debt or bond financing to fund current operating expenditures (expenses). Performance evaluatioh Performance measurement and productivity indicators shall be integrated into the annual budgeting process. All departments shall be reviewed annually by the City Manager for such performance criteria as program initiatives, compliance with policy direction, program effectiveness and cost efficiency. Budgetary controls The City shall maintain a budgetary control system to ensure adherence to the adopted budget and asSociated appropriations. Regular reports shall be provided comparing actual revenues and expenaitures (expenses) to budgeted amounts. Self-supporting enterprises All enterprise activities of the City shall be self-supporting to the greatest extent possible. These activities include, but are not limited to, Water and Sewer Utility Service, Sylvan Beach Pavilion, Airport, La Porte Area Water Authority, and the Golf Course. Service planning All departments shall share in the responsibility of meeting policy goals and ensuring long-term financial viability. Future service plans and program initiatives shall be developed reflecting policy directives, projected resources and future service requirements. 1 . e Contingencies The City shall budget a contingency in each of its operating and capital improvement funds. The contingency amount shall be used at the discretion of the City Manager for items that were unexpected or unforseen during the formal budget process. GFOA Distinguished Budget Presentation Award The City shall annually submit necessary documentation to obtain the Distinguished Budget Presentation Award as awarded by the Governmental Finance Officers Association of the United States and Canada. 2. Revenue Policies The objectives of the revenue policies is to ensure that funding for public programs is derived from a fair, equitable and adequate resource base, while minimizing tax differential burdens. Revenue structure The City shall attempt to obtain a diversified and stable revenue system to shelter programs from short-term fluctuations in any single revenue source. Potential revenue sources will be evaluated and, if feasible, initiated. Revenue collection The City shall follow an aggressive, but humane, policy of collecting revenues. Sources of services financing Services which have a city-wide benefit shall be financed with revenue sources which are generated from a broad base, such as property and other taxes. Services where the customer determines the use shall be financed with user fees, charges and assessments directly related to the level of service provided. Tax base capacity The objective of the City is to ensure that local general tax resources are not increased faster than the tax base capacity of the community. 2 . e User fees The City shall maximize the utilization of user charges in lieu of general revenue sources for services that can be individually identified and where costs are directly related to the level of service. Cost of service - The City shall establish user charges and fees at a level which reflects the costs of providihg the service, to the extent legally allowable. Operating, direct, indirect and capital costs shall be considered in the charges. Full cost charges shall be imposed unless it is determined that policy and market factors require lower fees. An example of this type of an exception is the residential solidwaste service, which will be funded equally with user fees and property tax revenues. Policy and market considerations - The City shall also consider policy objectives and market rates and charges levied by other public and private organizations for similar services when fees and charges are established. Bi-annual review - The City Manager shall direct a bi-annual review of fees and charges for services and will make appropriate modifications to ensure that charges grow at a rate which keeps pace with the cost of efficiently providing the service and to assure that one group of users are not subsidized by the general populace. Non-resident charges - Where practical, user fees and other appropriate charges shall be levied for activities or facilities in which non-residents participate in order to relieve the burden on City residents. Non-resident fees shall be structured at market levels so that resident users are subsidized to the greatest extent possible. Water and sewer rates - User charge fees for water and sewer shall be sufficient to finance all operating, capital and debt service costs for these utilities. Rates will be set such that these enterprise funds are never in a cash deficit position during the year. Additionally, where feasible, rates will be established where each portion of the service will cover the cost of the service provided. Internal service fees - When interdepartmental charges are used to finance internal enterprise functions, charges shall reflect full costs, including all indirect expenses. Donated revenues - All private money donated or contributed to the City for operations, maintenance, purchase of equipment, supplies, land or capital facilities shall be subject to current budget policies. The donated or contributed funds shall be deposited a~ miscellaneous revenues into the appropriate fund and the expenditure (expense) shall be budgeted (through a formal budget amendment, if required). 3 . e Administrative Transfers The City shall recover from selected enterprise operations an administrative fee. The fee shall be considered a payment for certain administrative functions (oversight management, accounting, human resource assistance, etc) and for payments in-lieu of taxes (i.e. if the operation was operated by someone other than the City, the City would receive property tax revenues). Flat Fee Transfers - Transfers from the Utility and La Porte Area Water Authority Funds to the General Fund will be determined by City management during the budget process and shall not exceed an overhead allocation where administrative fees are distributed to all City divisions based on their share of non-capital expenditures (expenses) as compared to all City non- capital expenditures (exp~nses). Transfer from Golf Course Fund - An administrative transfer from the Golf Course Fund to the General Fund shall be based on 10% of its estimated ending working capital balance, as long as its the transfer does not cause its working capital balance to fall below its targeted reserve balance as established in Section 3. Transfer from Commercial Solidwaste Fund - Upon successful privitation of the commercial solidwaste operation, the Commercial Solidwaste Fund will be dissolved by an administrative transfer to the General Fund. These transfers will occur over a multi-year period to minimize the impact on ongoing General Fund revenues. 3. Reserve Policies The objectives of the reserve policies is not to hold resources solely as a source of interest revenue, but rather to provide adequate resources for cash flow and contingency purposes, while maintaining reasonable tax rates and charges for services. In addition, the City's proximity to the Gulf Coast provides the very real possibility of a damaging tropical storm or hurricane. Operating funds The City shall strive to maintain a targeted working capital balance of 90 to 120 days of operating capital in its operating funds. The number of days of working capital shall be calculated by taking the budgeted expenditures (expenses) for the fund (including capital outlay), dividing by 365 days and multiplied by 90 days for the lower limit and 120 days for the upper limit. Debt service fund The Debt Service Fund will strive to maintain a targeted working capital balance of 60 days of service requirements. Any excesses over this amount will be used over a sufficient length of time as to provide a minimum impact on the City's Interest and Sinking portion of the tax rate. 4 e e 4. Debt Policies The objectives of the debt management policies is to maintain the City's ability to incur present and future debt at minimal interest rates in amounts needed for infrastructure and economic development of the City without endangering the City's ability to finance essential City services. General obligation bonds or certificates of obligations The City shall utilize tax supported general obligation bonds or certificates of obligations to finance only those capital improvements and long term assets which have been determined to be essential to the maintenance or development of the City. Revenue supported bonds The City shall utilize, where feasible, revenue supported or backed bonds to finance public improvements for its enterprise operations. Debt management The City shall strive to maintain a balanced relationship between debt service requirements and current operating costs, encourage growth of the tax base, actively seek alternative funding sources, minimize interest costs and maximize investment rate of returns. Bond term The City shall issue bonds with terms no longer than the economic useful life of the project. For revenue supported bonds, principal repayments and associated interest costs shall not exceed projected revenue streams. 5. Capital Budget Policies The objective of the capital budget policies is to ensure that the City maintains its public infrastructure in the most efficient manner. Capital improvement program The City shall prepare and adopt a five-year Capital Improvement Program which shall detail each capital project, the estimated cost, and funding source. An adopted priority system shall be used to rank recommended projects. Operated budget impacts Operating expenditures (expenses) shall be programmed to include the cost of implementing the Capital Improvement Program and shall reflect estimates of all associated personal expenditures (expenses) and operating costs attributable to the capital outlays. 5 . e Repair and replacement The City shall maintain its physical assets at a level adequate to protect the City's capital investments and minimize future maintenance and replacement costs. The capital budget shall provide for the adequate maintenance, repair and orderly replacement of the capital plant and equipment from current revenues where possible. 6. Accounting Policies The objectives of the accounting policies is to ensure that all financial transactions of the City are carried out in aC(fordance to the dictates of the City Charter, State Statutes, and the principles of sound financial management. Accounting standards The City shall establish and maintain accounting systems according to the generally accepted accounting principles and standards (GAAP) of the Governmental Finance Officers Associations (GFOA) and the Governmental Accounting Standards Board (GASB). The central system shall be used for financial transactions of all City departments. Annual audit An annual audit shall be performed by an independEint accounting firm which will issue an official opinion on the annual financial statements with a management letter detailing areas that could be improved. GFOA Certificate of Achievement Award The City shall annually submit necessary documentation to obtain the Certificate of Achievement for Excellence in Financial Reporting as awarded by the Governmental Finance Officers Association of the United States and Canada. 7. Investment Policies The objectives of the investment policies is to ensure that all revenues received by the City are promptly recorded and deposited in designated depositories, and if not immediately required for payments of obligations, are placed in authorized investments earning interest income for the City according to the adopted Investment Policy. The City's formal Investment Policy, as adopted by Ordinance 1802 on January 13, 1992, governs the City's investments. 6