| Financial Policies |
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The city of Colleyville has a series of financial policies to ensure consistency in the city's financial processes. The policies relate to revenue, expenditures, and fund balance.
ANNUAL BUDGET The budget shall provide a complete financial plan of all City funds and activities and, except as required by law or this Charter, shall be in such form as the City Manager deems desirable or the Council may require. A budget message explaining the budget both in fiscal terms and in terms of work programs shall be submitted with the budget. It shall outline the proposed financial policies of the City for the ensuing fiscal year, describe the important features of the budget, indicate any major changes from the current year in financial policies, expenditures, and revenues, with reason for such change. It shall also summarize the City’s debt position and include such other material as the City Manager deems advisable. The budget shall begin with a clear, general summary of its contents, shall show in detail all estimated income, indicating the proposed property tax levy, and all proposed expenditures for the ensuing fiscal year. The proposed budgeted expenditures shall not exceed the total of estimated income (the FY 2005 meets the criteria of this requirement). AMENDMENT BY COUNCIL BEFORE ADOPTION After public hearings, the Council may adopt the budget with or without amendment. It may add or increase programs or amounts and may delete or decrease any programs or amounts, except expenditures required by law or for debt service or for estimated cash deficit, provided that no amendment to the budget shall increase the authorized expenditures to an amount greater than the total of estimated income plus funds available from prior years. FINANCIAL REPORTS The City Manager shall submit to the Council at its second formal meeting each month the financial condition of the City by budget items, budget estimates versus accruals for the preceeding month and for the fiscal year to date. UTILITY FUND Net Income before depreciation and other non-operating expenses shall be equal to at least 1.2 times the average annual debt service requirement on all outstanding indebtedness secured by a pledge of utility fund revenues. All assumptions concerning utility fund revenues and expenses shall be reviewed on at least an annual basis to ensure the adequacy of existing water and sewer rates. INVESTMENT POLICY Investments made by the City will be made in compliance with the City of Colleyville Investment Policy. It is the policy of the City of Colleyville (the City) to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all State of Texas statutes and City ordinances. The primary objectives, in priority order, of the City’s investment activities shall be:
DEBT ISSUANCE POLICY GENERAL OBLIGATION BONDS The City shall have the power to borrow money on the credit of the City and to issue general obligation bonds for permanent public improvements or for any other public purpose not prohibited by the Constitution and laws of the State of Texas, and to issue refunding bonds to refund outstanding bonds of the City previously issued. All such bonds shall be issued in conformity with the laws of the State of Texas. REVENUE BONDS The City shall have the power to borrow money for the purpose of constructing, purchasing, improving, extending, or repairing of public utilities, recreational facilities or any other self-liquidating function not prohibited by the State of Texas, and to issue revenue bonds to evidence the obligation created thereby. Such bonds shall be a charge upon and payable from properties, or interest therein pledged, or the income therefrom, or both. The holders of the revenue bonds shall never have the right to demand payment thereof out of monies raised or to be raised by taxation. All such bonds shall be issued in conformity with the laws of the State of Texas. BONDS INCONTESTABLE All bonds of the City having been issued and sold and having been delivered to the purchaser thereof, shall thereafter be incontestable and all bonds issued to refund in exchange for outstanding bonds previously issued shall and after said exchange, be incontestable. USE OF BOND FUNDS Any and all bond funds approved by a vote of the citizens of Colleyville, will be expended only for the purposes stated in the bond issue. CERTIFICATES OF OBLIGATION All certificates of obligation issued by the City shall be approved by ordinance and issued in accordance with the laws of the State of Texas. GENERAL AND UTILITY FUND BALANCE POLICY General The objective of this policy is to ensure adequate fund balances are maintained, to have funding available for expenses in the event of unforeseen emergencies and to preserve the credit worthiness of the City for borrowing monies at favorable interest rates. After designations of the available General and Utility Fund Balances are authorized, the remaining respective amount is defined as the undesignated Fund Balance. Operating revenues will sufficiently fund current year operating expenditures. (Operating deficits are normally contrary to City policy as well as reasonable financial prudence.) All undesignated fund balances are eligible for use at the discretion of the City Council. Such determinations will be handled by the City Council on a case-by-case basis. Operating revenues are defined as both (a) current year revenues and (b) revenues generated in prior fiscal years. Purpose Establishing a policy for the fund balance in the General and Utility Funds is to provide a guideline for budgeting decisions and to insure that an adequate designated balance is provided to fund operations, by providing sufficient protection against uncollected taxes, shortfalls from municipal revenue sources, and cutbacks in distributions from the state or federal government. The General Fund is the primary operating fund of the City for its non-utility related operations. In addition, the City of Colleyville desires to maintain its current debt rating of AA+. Rating agencies are concerned about a government’s credit worthiness and the level of unreserved General and Utility Fund balances are a part of the rating agencies evaluation. There is no formula for determining an appropriate fund balance. Items to consider include the timing of revenue collections, the local and national economic environment, the volatility of the major revenue sources, and the degree of protection desired to mitigate current and future financial risks. The City of Colleyville obtains a substantial portion of its revenue from property taxes, sales taxes, franchise fees and utility fees. While the most stable of revenue sources, property tax growth over the coming years will stabilize in growth as the city nears build-out. Sales tax collections are derived from local retail sales and are dependent upon both the local and national economies. The collection of franchise fees, particularly those based upon sales of electricity and natural gas, vary widely depending upon local weather conditions. Utility fees, similar to franchise fees, are subject to weather conditions. As a result, the desired level of unreserved General and Utility Fund balances are higher than the minimum level designated by the Government Finance Officers Association recommended practice on determining the appropriate level of reserved balance for the General and Utility Funds. Procedures In order to achieve the objectives of this policy, the following guidelines shall be adhered to:
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Friday, July 25, 2008
©2006 City of Colleyville, Texas
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