(a) Definitions.
Banking depository agreement.
A document approved by the council that establishes the banking
arrangement between the city and a selected banking institution to
deposit, manage, and safeguard public funds.
Banking officer.
An individual selected by the council who will be responsible
for managing the public funds of the city. This individual must keep
all records as specified by law and manage the funds program according
to the guidelines detailed in the city public funds investment policy
of latest date.
Banking policy.
A document approved by the council that details the guidelines
to be followed for an investment program of public funds.
Investment program.
A plan and set of actions taken under the guidance of the
investment policy, which allows for the investment of public funds
in authorized opportunities that provide for growth of capital with
acceptable risk levels.
(b) Investment policy and bank depository agreement.
(1) In accordance with the Public Funds Investment Act (V.T.C.A., Government
Code 2256), the city’s currently adopted public funds investment
policy, is approved as the policy of record, and is to be followed
for the city investment program.
(2) In accordance with Government Code chapter 2256, the most current
bank depository agreement is the legal document directing the handling
of public funds, and shall direct approved actions for the banking
officer.
(c) Release of collateral.
The banking officer is hereby
authorized to release collateral, held by the bank which acts as security
for the public funds held by the bank on behalf of the city, and accept
a documented confirmation for collateral to be purchased by the bank
to replace the released collateral.
(Ordinance 2004-005 adopted 3/16/04; Ordinance adopting Code)
(a) Generally.
(1) Budgeting is an essential element of the financial planning, control
and evaluation process of municipal government. The “operating
budget” is the city’s annual financial operating plan.
(2) The annual budget includes all of the operating departments of the
general fund, proprietary funds, debt service funds, and capital improvement
funds.
(3) No budget will be adopted or appropriations made unless the total estimated revenues shall be equal to or in excess of such budget or appropriations, except otherwise provided by subsection
(j) of this section.
(b) Compliance with law.
(1) The Texas Local Government Code, for type A Municipalities, requires
a proposed budget be prepared by the mayor and filed with the municipal
clerk before the 30th day before the date the city council makes a
tax levy for the fiscal year.
(2) The budget shall be adopted no later than the twenty-seventh day
of the last month of the fiscal year.
(3) Therefore, the budget will be presented to the city council no later
than the 1st day of August, each year, to provide the city council
time to adopt the budget in the required time frame.
(4) Anything, within this division, that is determined to be in noncompliance
with or in violation of the laws of the state are deemed unenforceable,
but do not alter, change or negate the remainder of this division.
(c) Proposed budget.
A proposed budget shall be prepared
by the director of finance and city manager with participation from
all department directors. The budget shall include four basic segments
for review and evaluation:
(3) Operations and maintenance.
(4) Capital and other nonproject costs.
(d) Review.
The budget review process will include city
council participation in the development of each segment, citizen
input during the process, and sufficient time for council to address
policy and fiscal issues.
(e) Vendor approval list.
(1) The municipal clerk shall provide a list of vendors, for review with
the budget, who meet the necessary criteria to conduct business with
the city. The purpose of this review and approval, by the city council,
is to allow the municipal clerk sufficient time to acquire necessary
documents to make timely reports to the Internal Revenue Service (IRS)
and obtain any conflicts of interest forms.
(2) The minimum criteria requirements shall be to have the following
information on file with municipal clerk:
(A) A completed W-9 vendor form as provided by IRS.
(B) A current certificate of liability or insurance.
(C) Applicable conflict of interest forms; completed.
(f) City employee and city council participation.
In order
to minimize the possibility of the city council members individually
receiving incorrect or misrepresented budget or financial information,
and to avoid the appearance of any violations of the Open Meetings
Act, current city employees and city council members shall not engage
in discussions related to any part of the budget process except within
the legal confines of an open meeting.
(g) Filing of proposed budget.
(1) A copy of the proposed budget will be filed, by the mayor and/or
his/her designee, with the municipal clerk as required by state law.
(2) A copy will also be made available for citizens to review at city
hall and on the city’s website on the same date that the budget
is legally required to be filed with the municipal clerk.
(h) Adoption of budget.
The city council will conduct a
minimum of two (2) budget work sessions, each year, to review the
proposed budget, two (2) public hearings, and subsequently adopt by
ordinance the final budget.
(i) Fiscal year.
The fiscal year will be effective October
1st of each year.
(j) Balanced budget.
(1) The goal of the city is to balance the operating budget with current
revenues, whereby current revenues would match and fund ongoing expenses.
(2) For the purpose of balancing the budget, un-allocated balances in
the general fund may not be used to cover ongoing and routine operating
expenses, but, may be used to cover nonoperating expenses such as:
nonrecurring capital expenditures; unanticipated or emergency expense;
interest and sinking on debt; or as transfers to reserves for replacement
or unanticipated repairs on capital assets.
(3) The city council may authorize, by a super majority vote, to use
un-allocated fund balances to pay maintenance and operating expense
resulting in a temporary budget deficit. A temporary budget deficit
is the result of a timing difference between the receipt of anticipated
revenues and payment of anticipated expense between accounting periods.
For purposes of this section a super majority vote is three-fourths
of the sitting council.
(k) Planning.
The budget process will be coordinated so
that major policy issues are identified prior to the budget approval
date. This will allow the city council adequate time for consideration
of appropriate decisions and analysis of financial impacts.
(l) Reporting.
(1) Summary financial reports will be presented to the city council monthly
by the city manager.
(2) These reports will be in a format appropriate to enable the city
council to understand the overall budget and financial status.
(3) The city manager will also present quarterly reports, in the form and manner described in section
2.03.036(d), to the city council, within 25 days following the end of each quarter, which update the status of projects and related financial goals set forth in the budget.
(4) At the end of each fiscal quarter, any necessary requests for adjustments,
made by the city manager, will be considered for possible action by
the city council.
(m) Control and accountability.
(1) Each department director appointed by the city manager will be responsible
for the administration of his/her departmental budget. This includes
accomplishing the goals and objectives adopted as part of the budget
and monitoring each department budget for compliance with spending
limitations.
(2) Department directors may request a transfer of funds, up to a total
of $500.00, after verification by the municipal clerk that funds are
available, and the city manager has given approval.
(3) Transfers may only occur within the already approved budgeted line
items within a departmental budget category (personnel costs, operations
and maintenance or capital), without city council approval. All other
transfers of appropriations or budget amendments require city council
approval.
(n) Contingency appropriations.
(1) The budget may include contingency appropriations within designated
operating department budgets.
(2) These funds are used to offset expenditures for unexpected maintenance
or other unanticipated expenses that might occur during the year.
(o) Council contingency account.
(1) The budget may contain appropriated funds to be used at the discretion
of the city council at no more than 10% of the approved budget.
(2) Actual expenditure of these funds shall be specifically approved
by the city council on an item-by-item basis.
(p) Budget revisions/amendments.
The budget may be revised
and amended, by a majority vote of the city council on an as-needed
basis, to reflect the impact of significant un-anticipated changes
in revenue and expense.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Characteristics.
The city will strive for the following
optimum characteristics in its revenue system:
(1) Simplicity.
The city, where possible and without sacrificing
accuracy, will strive to keep the revenue system simple in order to
reduce compliance costs for the taxpayer or service recipient.
(2) Certainty.
(A) A knowledge and understanding of revenue sources increases the reliability
of the revenue system.
(B) The city will understand its revenue sources and enact consistent
collection policies to provide assurances that the revenue base will
materialize according to budget.
(3) Equity.
The city shall make every effort to maintain
equity in its revenue system; i.e., the city should seek to minimize
or eliminate all forms of subsidization between entities, funds, services,
utilities, and customer classes, and ensure an ongoing return on investment
for the city.
(4) Revenue adequacy.
The city should require there be a
balance in the revenue system; i.e., the revenue base will have the
characteristics of fairness and neutrality as it applies to cost of
service, the will of the people to pay, and ability of the people
to pay.
(5) Administration.
The benefits of a revenue source should
exceed the cost of levying and collecting that revenue.
(6) Diversification and stability.
A diversified revenue
system with a stable source of income shall be maintained. This will
help avoid instabilities in revenue sources resulting from external
factors such as: the economy; county, state and federal government
budgets and regulations; and weather.
(b) Other considerations.
The following considerations and
issues will guide the city in its revenue policies concerning specific
sources of funds:
(1) Cost/benefit of incentives for economic development.
The city will use due caution in the analysis of any incentives that
are used to encourage development. A cost/benefit (fiscal impact)
analysis will be performed as part of the evaluation.
(2) Nonrecurring revenues.
(A) One-time or nonrecurring revenues should not be used to finance current
ongoing operations.
(B) Nonrecurring revenues should be used only for nonrecurring expenditures
and not for budget balancing purposes.
(C) Any excess revenues not specifically tied to a project will be transferred
to the reserve accounts.
(D) Transfers or expenditures in excess of $500.00 from unallocated reserves
must receive prior council approval.
(3) Property tax revenues.
All real and business personal
property located within the city will be valued at 100% of the fair
market value for any given year based on the current appraisal supplied
by the county appraisal district.
(4) Interest income.
Interest earned from investments will
be distributed to the funds in accordance with the equity balance
of the fund from which the monies were provided to be invested.
(5) User-based fees and service charges.
For services associated
with a user fee or charge, the direct or indirect costs of that service
will be offset by a fee where possible. The city will review fees
and charges no less than once every three years to ensure that fees
provide adequate coverage for the cost of services. The city council
will determine how much of the cost of a service should be recovered
by fees and charges.
(6) Enterprise fund rates.
The city will review and adopt
utility rates as needed to generate revenues required to fully cover
operating expenses, meet the legal requirements of all applicable
bond covenants, and provide for an adequate level of working capital.
(7) Intergovernmental revenues.
All potential grants will
be examined for matching requirements and must be approved by the
city council prior to making application for the grant. It must be
clearly understood that operational requirements (ongoing costs) set
up as a result of a grant program could be discontinued once the term
and conditions of the program have been completed.
(8) Revenue monitoring.
Revenues, as they are received,
will be regularly compared to budgeted revenues, and variances will
be investigated. Variances in excess of 5% on an annualized basis
must be disclosed at the next regularly scheduled council meeting.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Appropriations and authorization of expenditures.
(1) The point of budget control is at the department level for all funds
with oversight by the city manager and municipal clerk. Any transfer
of appropriations between funds must be approved by the city council
and the city manager.
(2) The city manager may authorize transfers of appropriated funds between
departments without prior city council approval in amounts not exceeding
.5% of gross budgeted revenues.
(3) The city manager may authorize the transfer of any monies in emergency
situations when the health and safety of the citizens are at risk.
(b) Emergency expenditures.
(1) The city council may authorize an emergency expenditure.
(2) This may be done in cases of grave public necessity to meet an unusual
and unforeseen condition that was not known at the time the budget
was adopted.
(3) In practice, this has been interpreted to include revenue-related
expenses within the enterprise funds and timing differences on capital
improvement projects.
(c) Purchasing.
(1) All city purchases of goods or services will be made in accordance
with the city’s current purchasing procedures and with state
law.
(2) In accordance with state purchasing laws:
(A) In order to avoid any violations of the state purchasing laws and
any conflicts of interest, no member of city council shall require
city staff to give special consideration to a particular vendor.
(d) Prompt payment.
(1) All invoices approved for payment by the proper city authorities
shall be paid within thirty (30) calendar days of receipt of goods
or services or invoice date, whichever is later, in accordance with
state law.
(2) The city will take advantage of all purchase discounts, when possible.
(e) Risk management.
(1) The city will pursue every opportunity to provide for the public’s
and city employees’ safety and to manage its risks. The goal
shall be to minimize the risk of loss of resources through liability
claims with an emphasis on safety programs.
(2) To further reduce the risk of liability claims, no former or current
employee of the city or former or current city council member shall
perform any repair or maintenance services on any city-owned equipment.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Goals.
The city’s goal is to maintain city facilities
and infrastructure in order to provide excellent services to the customers
within the community, meet growth-related needs, and comply with all
state and federal regulations.
(b) Capital improvement plan (CIP).
(1) The city annually updates and adopts a five-year capital improvement
plan as an integral part of the operating budget adoption process.
The five-year CIP is reviewed and adjusted annually as needed.
(2) Year one of the CIP will be included in the current year operating
budget.
(3) Needed capital improvements are identified through system models,
repair and maintenance records and growth demands.
(4) A team approach will be used to prioritize CIP projects, whereby
city staff from all operational areas provide input and ideas relating
to each project and its effect on operations.
(c) Citizen involvement.
Citizen involvement and participation
will be solicited and encouraged, by the members of the city council,
in formulating the capital budget through neighborhood meetings, public
hearings and other forums.
(d) Control.
(1) All capital project expenditures must be appropriated in the capital
budget or receive approval by the city council through a budget amendment.
(2) Availability of resources must be identified and authorized before
any CIP contract is presented to the city council for approval.
(e) Financing programs.
(1) Where applicable, assessments, impact fees, pro-rata charges, or
other fees should be used to fund capital improvement projects which
have a primary benefit to specific identifiable property owners.
(2) Before long-term debt is approved, alternative funding and financing
sources will be explored and recommended to the city council by the
city manager. If long-term debt is approved by the city council, it
will be the policy of each council to use the funds to acquire major
assets with expected lives equal to or exceeding the average life
of the debt issue.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Generally.
The city recognizes that deferred maintenance
increases future capital costs. Therefore, the operating budget must
include:
(1) Sufficient funds to cover the costs associated with normal repair
and maintenance schedules; and
(2) Funds to establish and maintain “reserves for replacement”
of not less than 15% of the original cost of “major” capital
assets.
(b) Infrastructure maintenance.
(1) Ongoing maintenance and major repair costs are included as capital
expense within the departmental operating budgets. These costs are
generally considered system repairs and are not capitalized for accounting
purposes. They include such items as street seal coats, water line
repairs and other general system maintenance.
(2) Enterprise fund capital assets such as the wastewater plant and collection
lines are to be accounted and budgeted for separately as wholly owned
subsidiaries of the city.
(3) Transfers to and from enterprise funds must be clearly marked and
accounted for and reported to the city council at least quarterly.
(c) Fleet maintenance and replacement.
(1) The city has a major investment in its fleet of cars, trucks, tractors,
and other equipment.
(2) The city will anticipate replacing existing equipment as necessary
and will establish charges that are assigned to the using departments
to account for the cost of that replacement.
(3) City vehicle maintenance shall also be allocated in this manner.
(d) Facilities maintenance.
(1) The city established an ongoing maintenance program, which includes
major repairs, and equipment, as well as contracts for maintaining
city facilities.
(2) The city anticipated a useful life of such equipment and established
a means of charging those costs to the various departments in order
to recognize the city’s continuing costs of maintaining its
facilities.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Accounting.
(1) The city is solely responsible for the recording and reporting of
its financial affairs, both internally and externally.
(2) The city manager and the city chief financial officer are responsible
for establishing the structure for the city’s chart of accounts
and for assuring that procedures are in place to properly record financial
transactions and report the city’s financial position.
(b) Audit of accounts.
(1) An independent audit of the city accounts will be performed every
year. The auditor is retained by and is accountable directly to the
city council.
(2) City staff shall cooperate fully with the auditor by timely providing
access to all financial information and records.
(c) External reporting.
(1) Upon completion and acceptance of the annual audit by the city’s
auditors, the city shall prepare a written comprehensive annual financial
report (CAFR) which shall be presented to the city council within
180 calendar days of the city’s acceptance of the annual audit.
(2) The CAFR shall be prepared in accordance with fund balance accounting.
(d) Internal reporting.
(1) The finance department will prepare internal financial reports sufficient
to plan, monitor and control the city’s financial affairs. Financial
reports will be reported to the city council not less frequently than
quarterly.
(2) The reports will contain at a minimum the following information:
(A) Chart of depository accounts and their balances;
(B) Four (4) column comparative statement of revenue and expense reporting
actual year-to-date performance, annualized projected performance,
budget, and variance from budget.
(3) Accounting and reporting systems and procedures must be automated
utilizing up-to-date software and technology. Reliance upon manual
input and monitoring should be kept to an absolute minimum.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Generally.
(1) The city recognizes the primary purpose of capital facilities is
to provide services to the community.
(2) Using debt financing to meet the capital needs of the community must
be evaluated according to efficiency and equity.
(3) Efficiency must be evaluated to determine the highest rate of return
for a given investment of resources.
(4) Equity is resolved by determining who should pay for the cost of
capital improvements.
(5) In meeting demand for additional services, the city will strive to
balance the needs between debt financing and “pay as you go”
methods.
(6) The city realizes that failure to meet the demands of growth may
inhibit its continued economic viability, but also realizes that too
much debt may have detrimental effects on the city’s long-range
financial condition.
(7) The city will issue debt only for the purpose of acquiring or constructing
capital assets for the general benefit of its citizens and to allow
it to fulfill its various purposes as a city.
(8) An addendum to the fiscal administration ordinance which will provide
guidance on funding the interest and sinking fund balance from fiscal
year 2013 through fiscal year 2020.
(9) The guiding principle behind this attachment is to allow city council
to minimize the impact of the debt load during these years. Any increase
in assessed value revenue growth or utility fund net income above
5% per annum can be used to reduce the interest and sinking fund rate.
(b) Usage of debt funds.
(1) Debt financing will be considered for noncontinuous capital improvements
of which future citizens will be benefited. Alternatives for financing
will be explored prior to debt issuance and include, but are not limited
to:
(D) Contributions from developers and others.
(2) When the city utilizes long-term financing, it will ensure that the
debt is soundly financed by conservatively projecting revenue sources
that will be used to pay the debt.
(3) The city will not finance the improvement over a period greater than
the useful life of the improvement and it will determine that the
cost benefit of the improvement, including interest costs, is positive
to the community.
(c) Types of bond debt the city may incur.
(1) Certificates of general obligation (GOs).
General obligation
bonds must be authorized by a vote of the citizens of the city. They
are used only to fund capital assets of the general government and
are not to be used to fund operating needs of the city. The full faith
and credit of the city as well as the city’s ad valorem taxing
authority back general obligation bonds. Conditions for issuance of
general obligation debt include:
(A) When the project will have a significant impact on the tax rate;
(B) When the project may be controversial even though it is routine in
nature; or
(C) When the project falls outside the normal bounds of projects the
city has typically done.
(3) Revenue bonds will be issued to provide for the capital needs of
any activities where the capital requirements are necessary for the
continuation or expansion of a service. The improved activity shall
produce a revenue stream to fund the debt service requirements of
the necessary improvement to provide service expansion. The average
life of the obligation should not exceed the useful life of the asset(s)
to be funded by the bond issue and will generally be limited to no
more than twenty-five (25) years.
(4) Certificates of obligation or contract obligations (COs).
(A) Certificates of obligation or contract obligations may be used to
fund capital requirements that are not otherwise covered by either
general obligation or revenue bonds. Debt service for COs may be either
from general revenues (tax-supported) or supported by a specific revenue
stream(s) or a combination of both.
(B) Typically, the city may issue COs when the following conditions are
met:
(i)
When the proposed debt will have minimal impact on future effective
property tax rates;
(ii)
When the projects to be funded are within the normal bounds
of city capital requirements, such as for roads, parks, various infrastructure
and city facilities; and
(iii)
When the average life of the obligation does not exceed the
useful life of the asset(s) to be funded by the issue.
(C) Certificates of obligation will be the least preferred method of
financing and will be used with prudent care and judgment by the city
council. Every effort will be made to ensure public participation
in decisions relating to debt financing.
(d) Method of bond sales.
(1) The city will use a competitive bidding process in the sale of bonds
unless a condition in the bond market or the nature of the issue warrants
a negotiated bid. In such situations, the city will publicly present
the reasons for the negotiated sale.
(2) The city will rely on the recommendation of the financial advisor
in the selection of the underwriter or direct purchaser.
(e) Disclosure.
(1) Full disclosure of operating costs along with capital costs will
be made to the bond rating agencies and other users of financial information.
(2) The city staff, with assistance of the financial advisor and bond
counsel, will prepare the necessary materials for presentation to
the rating agencies and will aid in the production of the preliminary
official statements.
(3) The city will take responsibility for the accuracy of all financial
information released.
(f) Federal requirements.
The city will maintain procedures
to comply with arbitrage rebate and other federal requirements.
(g) Debt structuring.
(1) The city will issue bonds with an average life of twenty (20) years
or less, not to exceed the useful life of the asset acquired.
(2) The structure should approximate level debt service unless operational
matters dictate otherwise. Market factors, such as the effects of
tax-exempt designations, the cost of early redemption options and
the like, will be given consideration during the structuring of long-term
debt instruments.
(h) Bond reimbursement resolutions.
The city council may
authorize a bond reimbursement resolution for projects when the bonds
will be issued within the term of the existing city council.
(Ordinance 2020-0526-03 adopted 5/26/20)
(a) Generally.
The city will maintain working capital/fund
balances to provide a secure, healthy financial base for the city
in the event of a natural disaster or other emergency, allow stability
of city operations should revenues fall short of budgeted projections
and provide available resources to implement budgeted expenditures
without regard to actual timing of cash flows.
(b) Operational coverage.
The city’s goal is to maintain
sufficient operating revenues to cover expense for maintenance and
operations, not including interest and sinking. Operating revenues
do not include unallocated fund balances, but are the result of ongoing
and anticipated revenue sources.
(c) Operating reserves.
The city will build and maintain sufficient operating reserves in the general fund in an amount not less than 25% of budgeted maintenance and operations expense. Operating reserves are exclusive of and do not include reserves for replacement discussed in section
2.03.035(a)(2).
(d) Capital project funds.
(1) Every effort will be made for all monies within the capital project
funds to be expended within thirty-six (36) months of receipt.
(2) The fund balance will be invested and income generated will offset
increases in construction costs or other costs associated with the
project.
(3) Capital project funds are intended to be expended totally, with any
unexpected excess to be transferred to the debt service fund to service
project-related debt service.
(e) General debt service funds.
(1) Revenues within this fund are stable, based on property tax revenues.
(2) Balances are maintained to meet contingencies and to make certain
that the next year’s debt service payments may be met in a timely
manner.
(3) The fund balance should not fall below one month or 1/12th annual
debt service requirements, in accordance with IRS guidelines.
(f) Investment of unallocated reserve.
Unallocated reserves
will be invested in accordance with the city’s investment policy
to the extent permissible within depository contracts negotiated in
good faith.
(Ordinance 2020-0526-03 adopted 5/26/20)