(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:
(1) 
Revenues.
(2) 
Personnel costs.
(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:
(A) 
Grants.
(B) 
Use of reserve funds.
(C) 
Use of current revenues.
(D) 
Contributions from developers and others.
(E) 
Leases.
(F) 
Impact fees.
(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.
(2) 
Tax and revenue bonds.
(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)