HomeMy WebLinkAboutR88-125BUDGET - I~SER7~ POLICY
RESOLUTION NO. R88-125
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF PLAINVIEW, TEXAS, ESTABLISHING A BUDGET RESERVE POLICY.
WHEREAS, on February 20 - 21, 1988, the City Council held a
Retreat in Amarillo, Texas; and
WHEREAS, at said Retreat the City Council established goals and
objectives for the City; and
WHEREAS, one such goal was the adoption of a policy addressing
reserves for the budget of the City of Plainview; and
WHEREAS, a copy of said policy is hereby attached and made a
permanent part of this Resolution.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City
of Plainview, Texas that the attached policy addressing budget
reserves is hereby adopted.
I Carla J. Reese, City Secretary for the City of Plainview,
hereby certify that the above Resolution was adopted by the Plainview
C~,ty Council on April 12, 1988.
Carla J. '~eese, City Secretary
POLICY STATEMENT
BUDGET UNRESTRICTED RESERVES
April 12, 1988
SUBJECT: Budget Unrestricted Reserves
SCOPE: This policy sets forth the general guidelines for maintaining
Budget Unrestricted Reserves for the General Fund; Sanitation Fund;
and Utility Fund of the City of Plainview.
RESPONSIBILITY: It shall be the responsibility of the City Manager
to see that this policy is adhered to.
GUIDELINES: The efficiency of a City's general management is
refleCted to a great extent by the effectiveness of its budgeting
process. Therefore, the importance of budget balancing as a means of
maintaining a municipalities fiscal and managerial integrity cannot be
overstated.
Plainview, like all Texas Cities, is required by law to annually
adopt an operating budget with anticipated revenues at least equal to
anticipated expenditures. However, because both the .revenues and
expenditures are estimates of future events, the actual experience
during the fiscal year will seldom be exactly as forecasted in the
budget. The important consideration in determining the efficiency
of management is not whether the budget is balanced when adopted, but
whether actual revenues received and expenditures made during the
year are kept in balance. A weak revenue forecasting system or
inadequate information for projecting expenditures can produce budget
imbalances.
A number of factors outside of management control can also be
responsible for creating budgetary imbalances including:
fluctuations in the national or local economy; unexpected major
expenditure needs created by natural disaster; litigation; or
inflationary wage agreements. There may be occasions where reserves
are intentionally budgeted as revenue to reduce the fund balance.
This is an acceptable management tool to reduce what may be considered
to be an excessive reserve position and should be considered when
reviewing past performance.
Conservative financial officials generally maintain favorable
budgetary results by using conservative estimates of available
revenues, and by providing generous provisions for expenditure
contingencies. When such policies are followed, budget imbalances
should be relatively minimal and easily offset by surplus revenues
accumulated in prior years. The two main signals of danger in budget
performance are: a) an operating fund - expenditure imbalance in any
one fiscal year of significant magnitude; and b) a consistent
pattern of current expenditures exceeding current revenues by small
amounts for several years.
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Many city's financial emergencies have begun with a failure to
maintain reserves in the various funds.
In hopes that the City of Plainview may avoid future financial
emergencies, it is the goal of the City Council to maintain
unrestricted reserves in the General Fund, Sanitation Fund and
Utility Fund of the City between 10% and 15%. It is recognized that
circumstances will occur where the unrestricted reserves in said
funds will either be more or less than these general guidelines.
Prior to the occurrence of these situations the City Manager's Office
is to advise the City Council of such and provide an explanation as
to why such an event is occurring as well as recommendations as to
how the City Council should address said situations.
(Adopted on April 12, 1988, through Resolution R88-125)