Chapter 3.20
BUDGET PROCEDURES
Sections:
3.20.005 General provisions/definitions.
3.20.010 Timing and preparation.
3.20.040 Deposit and apportionment of funds.
3.20.050 Budget transfers and budget amendments.
3.20.060 Year-end appropriations.
3.20.005 General provisions/definitions.
Except as otherwise indicated, the meaning of accounting terms used in this chapter shall be as defined in the Glossary of Accounting Terms in Accounting Standards and Procedures for Counties prescribed by the California State Controller (“State Controller Standards”). As used in this chapter:
A. “Appropriated budget” means the expenditure authority, and related revenues, created by the appropriation ordinance enacted by the legislative body. The appropriated budget includes all appropriations, contingencies, reserves, transfers and legally authorized legislative and executive changes.
B. “Appropriation” means legal authorization granted by the legislative body to make expenditures and/or to incur obligations for specific purposes. An appropriation is limited in amount and time it may be expended.
C. “Appropriation for contingencies” means a budgetary provision representing that portion of the financing requirements which is set aside to meet unforeseen expenditure requirements.
D. “Available fund balance” means the portion of a fund’s equity (excess of assets over liabilities) which is available for financing expenditures of the current period.
E. “Budget” means a plan of financial operation embodying an estimate of proposed expenditures and the means of financing them. Without a modifier, the term indicates a financial plan for a single fiscal year.
F. “Budget officer” means the city manager.
G. “Budget unit” means department, fund, or other organizational unit whose financial activities are accounted for separately.
H. “Capital outlay” means expenditures resulting in acquisition or addition to the government’s fixed assets.
I. “Council” means the Capitola city council.
J. “Deficit” means: (1) the excess of a fund’s liabilities over its assets; or (2) the excess of expenditures over revenues during a period.
K. “Executory contract” means a contract which has begun but is not fully completed.
L. “Finance director” means the Capitola city finance director, or other designated supervisor of accounting.
M. “Fiscal year” means a twelve-month period to which the annual operating budget applies and at the end of which a government determines its financial position and results of operations.
N. “Fund” means a fiscal and accounting entity with a self-balancing set of accounts to record all assets, liabilities and equities segregated to carry on specific activities in accordance with special regulations or restrictions. Fund accounting is unique to government and not-for-profit accounting.
O. “Fund balance” means the mathematical difference between a fund’s assets and its liabilities. (A similar term is “net worth.”)
P. “General fund” means the fund used by a government to account for all financial activities except those required to be accounted for in another fund.
Q. “Reserve” means a portion of a fund balance that has been set aside by the legislative body for a specific future purpose; which is legally or contractually restricted for a specific future use; or which is otherwise not appropriable for expenditure.
R. “Treasurer” means the Capitola city treasurer. (Ord. 1025 § 2, 2018; Ord. 808, 1998)
3.20.010 Timing and preparation.
The actions outlined by this section and Section 3.20.020 are directory rather than mandatory.
A. Budget Estimates. On or near February 15th of each year, the budget officer should present a budget packet to each department head or other responsible person in charge of any budget unit. Using the forms provided, each responsible person should present the budget officer with estimated revenues (if any) to be realized by, and estimated expenditures necessary to operate, that person’s budget unit for the next fiscal year. The budget officer shall make necessary or desirable revisions to the estimates. Any responsible person whose estimates have been revised should have the opportunity to be heard by the budget officer before the budget study sessions required by subsection D of this section.
B. Budget Calendar. On or before March 1st of each year, the budget officer should prepare and disseminate a budget calendar specifying the dates of study sessions, hearings, meetings and other significant budget events.
C. Preliminary and Proposed Budget.
1. On or before April 1st of each year, the budget officer should compile a preliminary budget which should be made available to interested persons and shall be a document available to the public under the Public Records Act. The budget officer should include a report on the state of the city’s economy and finances; the outlook for the fiscal year to which the preliminary budget is to apply; and other matters relevant to sound budget decisions.
2. As modified during budget study sessions discussed under subsection D of this section, the preliminary budget shall become the proposed budget.
3. For all city funds, the preliminary and final budgets shall present the following data and information concerning financing sources and financing uses:
Sources.
a. Beginning unreserved, available fund balances;
b. Revenues classified as prescribed by the State Controller Standards, and interfund transfers in, as follows: on an actual basis for the second fiscal year preceding that to which the budget is to apply;
c. i. On an estimated basis for the first fiscal year preceding that to which the budget is to apply,
ii. On an estimated basis for the year to which the preliminary budget is to apply.
Uses.
a. Expenditures classified by object (salaries and benefits, services and supplies, other charges, capital outlays); and interfund transfers out, as follows:
i. On an actual basis for the second fiscal year preceding that to which the budget is to apply,
ii. On an estimated basis for the first fiscal year preceding that to which the budget is to apply,
iii. On an estimated basis for the year to which the preliminary budget is to apply;
b. Reserves, if any;
c. Appropriations for contingencies (excess of financing sources over financing uses plus reserves), if any.
D. Budget Study Sessions. Beginning approximately April 15th of each year, study sessions should be held to receive input on the preliminary budget from the public. At or before the study session during which the capital projects fund is discussed, a status report on the progress, funding, expenditures and commitments of each current-year capital project should be presented to the council.
E. Balanced Budget. In the preliminary, proposed, temporary, and final budgets, financing uses including expenditures, interfund transfers out, reserves and contingencies should equal financing sources including beginning available fund balance, revenues and interfund transfers in. (Ord. 808, 1998)
3.20.020 Hearing.
The council shall hold a hearing on the proposed budget following the conclusion of budget study sessions before adoption of the budget. The hearing may be continued from time to time as determined by the city council. (Ord. 808, 1998)
3.20.025 Budget adoption.
On or before June 30th, the council shall, by resolution, adopt a budget for the ensuing fiscal year. Adoption may be accomplished by reference to the proposed budget and, if so adopted, should have the same effect as if adoption had been by specific budgetary designation. If the council has not yet, for all relevant labor groups, finished its “...endeavor to reach agreement on matters within the scope of representation,” under Government Code Section 3505, the budget shall be a “temporary budget,” the adoption of which shall not prejudice the meet and confer process. Other adopted budgets shall be referred to as “final” budgets, but use of that term shall not impede the council’s authority to amend the final budget from time to time. (Ord. 808, 1998)
3.20.030 Appropriations.
A. Expenditures authorized in the final budget resolution are appropriated (controlled) at the budget unit level.
B. Notwithstanding subsection A of this section, expenditures in the capital projects fund should be appropriated at the individual project level.
C. Notwithstanding subsection A of this section, the council may set appropriations in greater detail, and direct additional controls for administration of the budget, as it deems necessary. The budget officer should be responsible for controlling expenditures as appropriated in the budget.
D. Except as otherwise provided by law, every city official should be limited in the incurring or paying of obligations to the amount of the appropriations allowed by the budget as adopted or thereafter revised.
E. The council shall approve no claim, and the treasurer shall issue no check in payment of, any obligation in excess of the amount appropriated therefor in the budget, except upon an order of a court of competent jurisdiction or as otherwise provided by law.
F. If at the beginning of any fiscal year, a budget for that year has not been adopted, the council shall approve, and the treasurer shall pay claims as follows:
1. In accordance with the amounts set forth in the proposed budget, except for capital outlay and new permanent employee positions;
2. If no proposed budget has been submitted, in accordance with the amounts contained in the last preliminary budget considered by the council at its most recent study session, excluding capital outlay and new permanent employee positions. (Ord. 808, 1998)
3.20.040 Deposit and apportionment of funds.
All moneys received by any city official from taxes or licenses, or (except as otherwise provided by city council ordinance or resolution) from any other source, shall be deposited with the city treasurer. Thereafter, the finance director shall apportion such receipts to the funds and/or departments in accordance with the budget. No moneys received and properly deposited to the credit of a fund should be transferred to a different fund unless the council, by the procedures set forth in Section 3.20.050 of this chapter, adopts a resolution ordering such transfer or different use than provided, and amends the budget accordingly. (Ord. 808, 1998)
3.20.050 Budget transfers and budget amendments.
A. Amounts set aside as reserves in a fund which in the opinion of the council are no longer necessary; amounts appropriated as contingencies in a fund; transfers between budget units; and other budgetary designations may be created, eliminated, revised in amount, or otherwise amended by an affirmative vote of three members of the council at any regular or special meeting.
B. Unless otherwise restricted by council action, the budget officer is authorized to approve transfers and revisions of appropriations within a budget unit.
C. The budget officer may from time to time review the status of estimated and actual revenues; appropriations; expenditures; encumbrances; and commitments in any fund, and recommend appropriate action to the council. If, upon considering such recommendations at any regular or special meeting, it is determined that any financing source will be unrealized in whole or in material part, the council should reduce the revenue estimates in the affected fund accordingly, and should cancel an equal amount of appropriations in that fund.
D. Any supplemental appropriations of fund balance, or budget transfers of twenty-five thousand dollars or more will require council approval. (Ord. 966 § 1, 2012; Ord. 808, 1998)
3.20.060 Year-end appropriations.
A. Except as provided in this section, any unexpended balance remaining to the credit of any appropriation should lapse at the end of the fiscal year and should revert to the fund balance of that fund.
B. All commitments included in the reserve for encumbrances at fiscal year-end are automatically appropriated for the succeeding fiscal year unless specifically canceled by council action.
C. The appropriation for the uncompleted balance of executory contracts should not lapse at year-end, but is automatically appropriated for the succeeding fiscal year unless specifically canceled by council action.
On or before June 30th, all department heads or responsible persons should provide the city manager with a written list of all executory contracts under that person’s supervision or responsibility. The list should show the name of the contracting party; the amount of the existing appropriation; the amount of the original contract; the amount of the contract completed to date; and the uncompleted balance of the contract.
D. All appropriations for the capital improvement program, grant funded programs, and other projects shall not lapse until the completion of the project. (Ord. 945 § 1, 2010; Ord. 808, 1998)