Chapter 7.04
FISCAL MANAGEMENT1

Sections:

7.04.010    Definitions.

7.04.020    Fiscal year.

7.04.030    Appropriation of funds.

7.04.040    Voter approval prior to appropriation and contents of ordinances for bond propositions.

7.04.050    General obligations of service areas.

7.04.060    Central treasury.

7.04.070    Funds established.

7.04.090    Use of hotel-motel room taxes.

7.04.100    Administration.

7.04.110    Required reports.

7.04.120    Lapsing of funds.

7.04.130    Reimbursement to the school district facilities maintenance reserve.

7.04.140    Interest.

7.04.150    Collections.

7.04.160    Collection of problem accounts and checks.

7.04.170    Appeal of penalties and interest charges.

7.04.180    Preaudit of payables.

7.04.190    Right of off-set.

7.04.200    Miscellaneous provisions.

7.04.210    Annual audit.

7.04.010 Definitions.

As used in this chapter, the following definitions apply:

Administrative department” means grouping of borough administrative activities established by ordinance or separate borough offices and organizational units which are to be budgeted, appropriated and accounted for individually; including but not limited to the assembly, mayor’s office, borough attorney’s office, etc., but not including the school district.

Appropriation” means a legislative action dedicating funds for a specific purpose and authorizing commitment of these funds for the accomplishment of this purpose.

Borough” means the Fairbanks North Star Borough, including the school district, unless otherwise indicated.

Central treasury” means the centralized bank account into which all borough cash receipts for all funds regardless of source or ultimate use are deposited.

Encumbrance/obligation” means a commitment to expend appropriations.

Expenses” means the total disbursements and encumbrances made against an appropriation.

Fund” means a separate accounting entity established for a specific purpose.

Ready cash/petty cash” means a sum of money set aside for the purpose of making change or paying small obligations for which the issuance of a formal voucher and/or check would be too expensive and time consuming.

School district” means the Fairbanks North Star Borough school district.

Undesignated fund balance” means moneys in a fund which have not been appropriated.

Unencumbered balance” means those moneys in an appropriation which have not been disbursed or encumbered. (Ord. 87-069 § 3, 1988; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.300.)

7.04.020 Fiscal year.

The fiscal year of the borough shall begin on July 1st and end on June 30th. (Ord. 85-001 § 2, 1985. 2004 Code § 3.01.010.)

7.04.030 Appropriation of funds.

A. The assembly may from time to time authorize the expenditure of borough moneys by appropriating ordinance. Except as specified in subsection (B) of this section, no person shall obligate, encumber, or expend borough moneys except in accordance with appropriations or as otherwise authorized by law.

B. Notwithstanding the provisions of subsection (A) of this section, the chief financial officer of the borough may expend moneys from the central treasury without prior appropriation for:

1. Investment of funds;

2. Establishment of ready cash fund;

3. Refunds of moneys erroneously paid to the borough;

4. Payments to municipalities in the borough or the state for their respective revenues collected by the borough;

5. Payments of any obligations incurred when the provisions of FNSBC 7.12.050(C) apply.

C. Unless the assembly provides otherwise by ordinance:

1. The borough moneys necessary to pay the principal and interest then due, or to become due during a given fiscal year, on general obligation bonds, revenue bonds, bond anticipation notes, tax anticipation notes, and other similar obligations issued by the borough are appropriated on July 1st of each fiscal year from the fund balance of the fund from which the said principal and interest would normally and routinely be paid.

2. As related to general obligation bonds or other similar obligations issued by the borough, the borough moneys necessary to make, or cause to be made, all computations, filings, and payments necessary to meet the requirements of the United States Internal Revenue Code, and to pay other costs, if any, to comply with other bond covenants, then due or to become due during a given fiscal year, are appropriated on July 1st of each fiscal year from funds available or to become available in the debt service fund.

D. The borough chief financial officer, or the superintendent of schools or his or her designee, is authorized to accept monetary gifts, donations, and bequests made to the borough or to the school district respectively, in a total value not exceeding $1,000 from any one donor in any one fiscal year. Gifts to the school district exceeding $1,000 shall be accepted by the school board and reported to the assembly. All other gifts must be accepted by the mayor or his designee and shall be reported to the assembly, except that gifts over $50,000 or gifts from a borough contractor for use in the performance of a borough contract must be accepted by the assembly. Gifts accepted without designation as to use thereof shall be treated as miscellaneous revenue in the general fund. To the extent consistent with law, any designated gifts accepted by the mayor from a nongovernmental organization, individual, or estate are appropriated for the specific purpose designated by the donor. Notwithstanding the provisions of FNSBC 7.04.120(A), any appropriation made under this section shall be treated as a capital improvement and the lapsing provisions of FNSBC 7.04.120(B) will apply.

E. Revenue from sales of surplus library books and materials is hereby appropriated for the purchase of new library books and materials.

F. Revenue from the sale of abandoned vehicles and parts is appropriated to the abandoned vehicle removal program. (Ord. 2013-84 § 2, 2013; Ord. 2010-42 § 2, 2010; Ord. 2001-71 § 9, 2001; Ord. 94-009 §§ 3, 4, 1994; Ord. 89-009 § 2, 1989; Ord. 86-017 § 32, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.020.)

7.04.040 Voter approval prior to appropriation and contents of ordinances for bond propositions.

A. Except for preliminary planning, site acquisition, or as necessary to comply with the provisions of subsection (C) of this section, the assembly shall not appropriate moneys for any capital project which requires the borough to incur bonded indebtedness to finance all or part of the project, until said project has been approved by a majority of the votes cast on the question at a general or special election.

B. The ballot question placed before the voters as required by subsection (A) of this section shall clearly and concisely state the primary purpose, total construction cost including site acquisition, and the projected annual maintenance and operation cost of the project.

C. Each ordinance providing for a bond proposition to be submitted to the voters for construction of a new capital improvement shall specify:

1. The proposed geographical vicinity of the project;

2. The conceptual site plan indicating the relationship of the proposed project with the roads and buildings or structures immediately surrounding the site;

3. The estimated time schedule for beginning and completion of the project;

4. If possible, a minimum 10-year projection regarding impacts on traffic flow;

5. Financial information to include:

a. Estimated total project cost, including interest,

b. The estimated amount to be paid by the borough, by the state and by the federal government, if applicable,

c. The approximate amount that would be due in annual taxes on $100,000 in assessed value to retire the debt remaining after state and federal reimbursement, and

d. The approximate amount per capita per annum to retire the debt, based on estimated current population;

6. The date by which the first portion of the bonds is anticipated to be sold; and

7. A clause stating that authority for unissued bonds will terminate on completion of all of the authorized construction projects.

This subsection does not apply to bond propositions for upgrades, renovations or additions to existing facilities. Completion of construction shall be determined in accordance with FNSBC 8.40.010(B). (Ord. 96-007 § 2, 1996; Ord. 86-090 § 2, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.025.)

7.04.050 General obligations of service areas.

A. No obligation, including a loan from the road service revolving loan fund, secured by a pledge of taxes to be levied in a service area may be issued unless authorized by the assembly and ratified by a majority of the qualified voters in the service area voting on the question. In a service area where there are no qualified voters to vote on the question, the obligation may be issued upon the written consent of the owners of at least 51 percent of the parcels within the service area.

B. The ballot question placed before the voters as required by subsection (A) of this section shall clearly and concisely state the primary purpose, total construction cost including site acquisition, if any, and the projected annual maintenance and operation cost of the project.

C. Each ordinance for a loan or other obligation to a service area to be submitted to the voters of the service area shall specify:

1. The proposed project;

2. The geographical vicinity of the project;

3. The estimated time schedule for beginning and completion of the project;

4. Financial information to include:

a. The estimated total project costs, including interest;

b. The loan or obligation terms, i.e., length of repayment, interest rate, etc.;

c. The estimated amount to be paid by the road service area directly, through the loan or other obligation, and by the state, the federal government or other source if applicable; and

d. The approximate amount that would be due in annual taxes on $100,000 in assessed value to retire the debt on the project using the most recently certified assessed valuations.

D. Property subsequently annexed into a service area is subject to the remainder of any indebtedness previously incurred by that service area.

E. The indebtedness of a service area remains the indebtedness of each parcel within the area at the time of the vote that established the debt or subsequent annexation into the service area notwithstanding:

1. Removal of the parcel from the service area;

2. Change of ownership of the parcel;

3. Subdivision or other replat of the parcel;

4. A subsequent court determination that the service area was not validly formed under law or by virtue of a defect in the proceedings creating the service area; or

5. The subsequent dissolution of the service area pursuant to FNSBC 14.08.030 or otherwise. (Ord. 2003-55 § 4, 2003. 2004 Code § 3.01.027.)

7.04.060 Central treasury.

The mayor shall deposit all money collected and received by the borough into the central treasury. The chief financial officer is the custodian of the central treasury. (Ord. 86-017 § 33, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.030.)

7.04.070 Funds established.

A. There is established the general fund of the borough. The general fund shall be the primary operating account of the borough, and unless otherwise provided for, all revenue and expenses of the borough shall be accounted for through the general fund.

B. The assembly or the mayor may establish other funds of the borough as required. Any fund established, and the management of that fund, shall conform substantially to the standards promulgated by the national committee on governmental accounting or its successor. The major categories of funds shall be:

1. Special revenue funds;

2. Debt service funds;

3. Capital project funds;

4. Enterprise funds;

5. Intragovernmental service funds;

6. Trust and agency funds;

7. Special assessment funds.

C. The finance director shall maintain groups of accounts for general fixed assets and general long-term debt. (Ord. 85-001 § 2, 1985. 2004 Code § 3.01.040.)

7.04.090 Use of hotel-motel room taxes.

A. On the first business day of July following the close of the preceding fiscal year, hotel-motel room taxes received for the preceding fiscal year will be transferred to the room tax fund. Subsequent closing and audit adjustments to hotel-motel room tax revenues of the preceding fiscal year will be made to the room tax fund as necessary.

B. Transfers to the room tax fund will be made as follows:

1. During the fiscal year ending June 30, 2005, an amount equivalent to 25 percent of the prior year hotel-motel room tax revenues;

2. During the fiscal year ending June 30, 2006, an amount equivalent to 45 percent of the prior year hotel-motel room tax revenues;

3. During the fiscal year ending June 30, 2007, and on each June 30th thereafter, an amount equivalent to 65 percent of the preceding year’s hotel-motel room tax revenues. (Ord. 2003-20-1V § 3, 2004; Ord. 2003-19 § 3, 2003. 2004 Code § 3.01.046.)

7.04.100 Administration.

A. The borough chief financial officer shall supervise the accounts of all funds of the borough. The chief financial officer may delegate this responsibility to the superintendent of schools or the superintendent’s designee for all matters pertaining to the operation of the school district.

B. The accounts of the borough shall show in detail the financial transactions of all funds, appropriations and administrative departments.

C. No person shall obligate, encumber, or expend borough moneys except in accordance with appropriations or as otherwise authorized by law. Obligations, encumbrances, and expenditures of borough moneys in violation of this provision are void. Expenditures of funds in accordance with FNSBC 7.04.030(B) are not prohibited by this subsection. (Ord. 2008-40 § 2, 2008; Ord. 2001-06 § 2, 2001; Ord. 86-017 § 34, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.050.)

7.04.110 Required reports.

A. Not later than the last day of each month, the chief financial officer of the borough shall submit to the assembly, through the mayor, reports of borough financial activity as of the last day of the month immediately preceding the issuance of the reports.

B. The reports required by this section shall contain the following:

1. Fiscal year-to-date budget to actual report for all funds;

2. Such other notations and documents as the chief financial officer feels may be appropriate for that month.

C. Such reports may be on paper or electronic. Furthermore, submission may be limited to notification by the chief financial officer to the clerk’s office that the month is closed and financial activity through the previous month-end is available for viewing electronically or printing locally. (Ord. 2008-40 § 3, 2008. 2004 Code § 3.01.055.)

7.04.120 Lapsing of funds.

A. At the close of the fiscal year, an unencumbered appropriation for operations shall lapse into the fund from which appropriated. Further, each year, after the acceptance of the audit by the audit committee and, if possible, prior to January 1st, 66 and two-thirds percent of the net general fund lapse in the most recent complete and audited fiscal year shall be transferred from the general fund to the facilities maintenance reserve, and five percent of the net general fund lapse in the most recent complete and audited fiscal year shall be transferred from the general fund to the asset replacement reserve fund. “Net general fund lapse” is defined as the lesser of (1) the positive variance between the final budget and the fiscal year actuals on a budgetary basis for the net change in fund balance (excluding project and other abnormal lapse impacts), or (2) the increase in the unassigned fund balance on a Generally Accepted Accounting Principles (GAAP) basis, and the amount shall be capped, if necessary, for the borough to remain in compliance with its most recently adopted fiscal policy related to the minimum level of general fund unassigned fund balance. Within 30 days of the transfers, the mayor shall notify the assembly of the date and amount of each transfer.

B. An appropriation for capital improvement, or in connection with requirements of federal and state grants, shall not lapse until the purpose of the appropriation has been accomplished. When the capital improvement project is funded from the deferred maintenance fund, the unexpended remainder shall lapse to that fund immediately upon completion of the specific appropriation project. No funds from one project appropriation may be used to further or complete another project without review and reappropriation by the assembly. For the purposes of this subsection, projects that are bid as a package for efficiency in project management and construction will be considered one project.

C. Upon the completion or abandonment at any time within any fiscal year of any work, improvement or other project for which a specific encumbrance has been made, as determined by the finance director, the balance of the specific encumbrance shall be returned to the unencumbered balance of the appropriation for said work, improvement or other project. In cases where the encumbrance is from a prior year appropriation the balance will revert to the undesignated fund balance of the fund from which the appropriation was made.

D. Annual appropriations to service areas do not lapse unless the service area loses its identity through merger or dissolution, in which case said appropriations shall lapse into such fund as the assembly shall designate.

E. Notwithstanding other provisions of this section, the school district may carry over from one year to the next unassigned local appropriation fund balances, not exceeding seven percent of the local contribution to education for that fiscal year. The superintendent of schools shall account separately for the local funds on a pro rata basis, by applying, to the June 30th unassigned fund balance, the percentage of the local appropriation to the total actual revenues in the school district’s general operating fund for the same fiscal year ending June 30th. To the extent permitted by law, the calculated local portion in excess of the seven percent shall lapse to the borough’s school district facilities maintenance reserve fund, except for any of this portion formally assigned by the school board to be used for expenditures in the immediately subsequent fiscal year. The school district shall revert to the borough’s school district facilities maintenance reserve fund the first 25 percent of the total increase in unassigned general fund fund balance as calculated on a fund-level GAAP basis (generally accepted accounting principles) not to exceed $1,000,000. The calculation of the amount to revert shall be based upon the final unassigned general fund fund balance amount as of June 30th of each fiscal year subject to audit. (Ord. 2016-52 § 2, 2017; Ord. 2012-12 § 2, 2012; Ord. 2012-01 § 3, 2012; Ord. 2009-49 § 2, 2009; Ord. 2009-37 § 2, 2009; Ord. 2005-72 § 2, 2005; Ord. 2001-07 § 2, 2001; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.060.)

7.04.130 Reimbursement to the school district facilities maintenance reserve.

To the extent a project is paid for by the school district facilities maintenance reserve, any funds received in a given fiscal year in reimbursement of that project are appropriated on July 1st of the subsequent fiscal year and shall be transferred into the school district facilities maintenance reserve. (Ord. 2014-09 § 2, 2014. 2004 Code § 3.01.061.)

7.04.140 Interest.

The mayor shall deposit all interest earned by borough investments into the general fund, except as otherwise provided in this section. If the grant, endowment or other contract under which the borough received moneys requires that interest earned by the borough on such moneys be applied to the purpose for which the moneys were received, or interest is required to be allocated by ordinance, resolution or Generally Accepted Accounting Principles (GAAP), the mayor shall deposit all interest received therefrom into the fund from which the said moneys were withdrawn for investment. Interest earned on service area funds shall be deposited in the fund for the service areas whose funds earn said interest. (Ord. 94-068 § 4, 1994; Ord. 89-086 § 2, 1989; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.071.)

7.04.150 Collections.

The chief financial officer shall be responsible for billing and collecting all real property taxes, sales taxes, special assessments and miscellaneous revenues of the borough. Undesignated remittances shall be treated as miscellaneous revenue in the general fund. The chief financial officer shall report revenue accruing to the borough not anticipated by the fiscal year budget appropriation to the assembly at least quarterly. (Ord. 86-017 § 35, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.080.)

7.04.160 Collection of problem accounts and checks.

A. The chief financial officer may impose a fee for checks remitted to the borough in payment of any obligation that are not honored by the drawee bank. Fees imposed shall be established in the annual fee schedule in accordance with FNSBC 8.60.010.

B. The borough may utilize the services of a collection agency to assist in the collection of moneys due to the borough. The mayor, or the mayor’s designee, shall have authority to negotiate a contract with a collection agency for such services.

C. The chief financial officer shall have the authority to write off, without assembly approval, changes to accounts which are a result of a borough clerical error or delinquent accounts receivable which are less than or equal to $300.00 and which have been determined to be uncollectible.

D. The chief financial officer shall present annually to the assembly a list of delinquent accounts receivable which have been determined to be uncollectible, are greater than $300.00 and are not a result of a borough clerical error. After the date of presentation of said list, the chief financial officer shall not carry said accounts as assets on the accounts of the borough unless the assembly by resolution directs otherwise. (Ord. 2001-09 § 3, 2001. 2004 Code § 3.01.090.)

7.04.170 Appeal of penalties and interest charges.

A. The record owner of any parcel of real property against which property tax penalty and interest charges are assessed by the borough may appeal the imposition or amounts thereof or request a waiver of penalties by filing a written notice of appeal with the borough chief financial officer not later than December 31st of the tax year in question.

B. The chief financial officer may waive imposition of any penalties if:

1. A natural catastrophe occurs which prevents the timely delivery of payment; or

2. The late payment occurred due to extraordinary circumstances such that imposition of the penalty would result in a manifest injustice.

“Extraordinary circumstances” for purposes of this section means any specific circumstances beyond the taxpayer’s control that placed the taxpayer in a significantly different situation from a typical taxpayer making a late payment. A “manifest injustice” for purposes of this section means something that is shocking to the conscience or obviously unfair.

C. The assembly may waive imposition of any penalties if the late payment occurred due to extraordinary circumstances such that the imposition of the penalty would result in a manifest injustice. For the purposes of this section, manifest injustice includes circumstances within the taxpayer’s control if the assembly finds that the taxpayer attempted in good faith to make timely payment.

D. The chief financial officer shall examine the borough records and the matters presented by the appellant and shall determine whether the appeal is within the chief financial officer’s authority or should be directly referred to the assembly. The clerk’s office and the property owner who filed the appeal shall be notified in writing of any referrals to the assembly. This notification shall include any relevant borough records. If the appeal is within the authority of the chief financial officer, the chief financial officer shall determine whether the assessment of penalty and interest is correct or whether a waiver as provided for in this section should be granted. If the appeal is within the authority of the chief financial officer, the chief financial officer shall notify the property owner in writing of his or her decision.

E. If the chief financial officer makes a decision on the merits of the appeal, the property owner may appeal the chief financial officer’s determination to the assembly by filing notice thereof with the borough clerk not more than 20 days following the date on which the chief financial officer’s decision was mailed. The assembly shall hear the matter de novo.

F. The appeal of the chief financial officer’s decision is limited to whether payment was made, postmarked or deposited prior to the payment dates specified in FNSBC 8.04.130 or whether the penalty should be waived for the circumstances specified in subsection (B) of this section. (Ord. 2014-14 § 2, 2014; Ord. 2011-11 § 3, 2011; Ord. 86-017 § 37, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.100.)

7.04.180 Preaudit of payables.

A. The borough directors, other borough employees designated by the mayor, and the superintendent of schools shall certify to the controller requisitions and requests for payment covering expenditures against their respective appropriations. Such certification will attest that the requisition or request is legal, proper and is made for an amount not in excess of the sum then available for the purpose named therein.

B. The chief financial officer shall enter all such requisitions or requests, after being certified as aforesaid, on the books of account of the borough.

C. When the borough comptroller determines that:

1. A payment request is consistent with the provisions of FNSBC 7.04.190 and 7.12.130;

2. That subsection (A) of this section has been followed; and

3. That the document is for a legal purpose, in proper form, and in compliance with established policy and procedures, the comptroller or designee shall process the request.

D. Within 30 days of the comptroller’s receipt of any approved payment authorization, the comptroller shall draw a check on the borough treasury for the amount specified if there are sufficient moneys available for its payment.

However, if a discount is offered by a vendor and the amount of the discount is greater than the cost of making an early payment then the comptroller will ensure that the check is issued within a time frame which allows the borough to benefit from the discount.

E. The chief financial officer shall issue all checks and each check shall set forth on its face a number, the date of issue, the name of the party to whom payable, the account to be charged therewith, and the amount thereof. Checks issued shall be signed by the official or persons designated in a resolution adopted for that purpose. No person shall draw, issue or sign a borough check payable to cash.

F. In the case of payment of principal and interest on the funded debt of the borough, the comptroller shall initiate the necessary check request which will require the approval of the chief financial officer prior to issuance of payment.

G. When a delegation of authority authorized by FNSBC 7.04.100(A) is in effect, the superintendent of schools shall establish safeguards that are substantially similar with this section. (Amended during 1993 republication; Ord. 86-017 § 38, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.110.)

7.04.190 Right of off-set.

Disbursement of moneys to a person, firm or corporation will be made only after all the various receivable accounts of the borough have been reviewed for outstanding balances owed to the borough by said person, firm or corporation, and the disbursement shall be reduced by off-setting the amount of an indebtedness due the borough from such person, firm or corporation. (Ord. 85-001 § 2, 1985. 2004 Code § 3.01.120.)

7.04.200 Miscellaneous provisions.

Municipal funds and grants which have been appropriated by the assembly to institutions and nonprofit organizations for the benefit and welfare of the public shall be controlled by conditions and regulations imposed by the assembly and shall be subject to financial audit under the direction of the chief financial officer. (Ord. 86-017 § 39, 1986; Ord. 85-001 § 2, 1985. 2004 Code § 3.01.130.)

7.04.210 Annual audit.

A. The chief financial officer and the superintendent of schools shall close the budgetary books of the borough and of the school district, respectively, not more than 90 days after the end of the fiscal year.

B. The assembly shall have conducted an annual independent audit of all borough accounts, including the accounts of the school district, by a qualified certified public accountant who meets independence standards established by the American Institute of Certified Public Accountants and the Government Accountability Office. The audit shall be completed as soon as practicable following the close of the applicable fiscal year but no later than April 1st of the following calendar year. The auditor shall present reports required by Generally Accepted Auditing Standards to the borough audit committee. The mayor or the mayor’s designee shall prepare such response to the audit reports addressing any findings or recommendations included in those reports as the mayor or the mayor’s designee deems appropriate. Copies of the final audit reports, and the mayor’s response thereto, shall be made available to the public as soon as practicable. (Ord. 2008-40 § 4, 2008; Ord. 2001-06 § 3, 2001; Ord. 86-017 § 40, 1986; Ord. 85-001 § 2, 1985. 2004 Code §§ 3.01.200(A), (B).)


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    For statutory provisions requiring the assembly to establish the manner for preparation and submission of the budget and capital programs by the executive, see AS 29.35; for provisions governing expenditure of borough revenues, see AS 29.35; for provisions requiring a post audit, see AS 29.35.