HomeMy Public PortalAbout2005_01_11_r008 Fiscal Policy for the Town of LeesburgThe Town of
Leesburg,
Virginia
RESOLUTION NO.
A RESOLUTION:
PRESENTED January 11, 2005
2005-8 ADOPTED January 11, 2005
ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
WHEREAS, the Town Council and Town Manager are responsible to the town's residents
and taxpayers to carefully account for all public funds, to manage town finances wisely, and to
plan for the adequate funding of services; and
WHEREAS, a fiscal policy is designed to establish guidelines and goals to promote the
fiscal well-being of the town and to provide guidance to the Town Manager; and
WHEREAS, a fiscal policy that is adopted, adhered to, and regularly reviewed and
updated as necessary is recognized as the cornerstone of prudent financial management; and
WHEREAS, effective fiscal policy should strive to promote financial stability by
establishing clear, concise, and consistent guidelines; to direct attention to the total financial
picture of the town rather than to single issues; to promote the view of linking long-term
financial planning with day-to-day operations; to provide the Town Council, Town Manager,
residents, and taxpayers with a framework for measuring the impact of services against
established fiscal guidelines; to contribute significantly to the town's ability to shield itself from
fiscal crises; and to enhance short- and long-term credit availability by helping to achieve and
maintain the highest credit and bond ratings possible; and
WHEREAS, the Town Council and Town Manager will review an adopted fiscal policy
periodically and the Town Council will approve any significant changes.
THEREFORE, RESOLVED by the Council of the Town of Leesburg in Virginia the
fiscal policy goals as follows:
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A RESOLUTION: ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
SECTION I. Accounting, Auditing, and Financial Reporting
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The town will establish and maintain the highest standards of accounting
practices in conformance with uniform financial reporting in Virginia and
generally accepted accounting principals for governmental entities as
promulgated by the Governmental Accounting Standards Board.
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The town will engage an independent firm of certified public accountants
to perform an annual financial and compliance audit according to
generally accepted government-auditing standards and will have these
accountants publicly issue an opinion, which will be incorporated in a
comprehensive annual financial report.
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The town will mmually seek both the Government Finance Officers
Association Certificate of Achievement for Excellence in Financial
Reporting and the Government Finance~ Officers Association
Distinguished Budget Presentation Award.
SECTION II. Asset Management
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The town will capitalize all fixed assets with a value greater than $5,000
and an expected life of 2 years or more.
b. The operating budget will provide for minor and preventive maintenance.
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The capital budget will provide for the acquisition of fixed assets and the
construction, or total replacement of physical facilities to include
additions existing facilities, which increase the square footage or asset
value of that facility or other asset. The town will protect its assets by
maintaining adequate insurance coverage through either commercial
insurance or risk pooling arrangements with other governmental entities.
SECTION III. Revenue Management
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The town will maintain a diversified and stable revenue structure to
protect it from short-mn fluctuations in any one-revenue source.
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The town will estimate its annual revenues by an objective, analytical
process.
The town, where practicable, will institute user fees and charges for
specialized programs and services. Rates will be established to recover
operational as well as overhead or indirect costs and capital or debt service
costs, and the town will periodically review user fee charges and related
expenditures to determine if pre-established recovery goals are being met.
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A RESOLUTION: ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
d. The town will follow an aggressive policy of collecting revenue.
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The town should routinely identify intergovernmental aid funding
possibilities. However, before applying for or accepting intergovernmental
aid, the town will assess the merits of a particular program as if it were funded
with local tax dollars. Local tax dollars will not be used to make up for losses
of intergovernmental aid without first reviewing the program and its merits as
a budgetary matter. All grant applications, prior to submission, must be
approved by the Town Manager; grants and donations may be accepted only
by the Town Council; and no grant will be accepted that will incur
management and reporting costs greater than the grant amount.
SECTION IV. Budget Management
Operating Budgets
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The town, to maximize planning efforts, intends to prepare the operating
budget with a multi-year perspective.
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The budget is a plan for raising and allocating resources. The objective is
to enable service delivery within available resources. Services must be
delivered to residents and taxpayers at a level, which will meet real needs
as efficiently and effectively as possible.
The town will fund current expenditures with current revenues and use
nonrecurring revenues for nonrecurring expenditures.
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It is important that a positive undesignated fund balance and a positive
cash balance be shown in all governmental funds at the end of each fiscal
year. When deficits appear to be forthcoming within a fiscal year,
spending during the fiscal year must be reduced sufficiently to create a
positive undesignated fund balance and a positive cash balance.
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Where possible, the town will integrate performance measurements and
productivity indicators within the budget. This should be done in an effort
to continue to improve the efficiency and effectiveness of town programs
and employees. Performance measurement should become a dynamic part
of town government administration.
The budget must be structured so that the Town Council and the general
public can readily establish the relationship between revenues,
expenditures and the achievement of service objectives.
Budgetary reviews by the Town Council and Town Manager will focus on
the following basic concepts:
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A RESOLUTION: ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
Existing Service Costs. The justification for base budget program
costs will be a major factor during budget reviews.
Administrative Costs. In all program areas, administrative
overhead costs should be kept to the absolute minimum.
Program Expansions. Proposed program expansions above existing
service levels must be submitted as separate budgetary requests
requiring detailed justification. Every proposed program expansion
will be scrutinized on the basis of its relationship to the health,
safety and welfare of the community to include analysis of long-
term fiscal impacts.
New Programs. Proposed new programs must also be submitted as
individual budgetary requests requiring detailed justification. New
programs will be evaluated on the same basis as program
expansions to include analysis of long-term fiscal impacts.
Capital Budgets
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The town will make all capital improvements in accordance with an
adopted capital improvements program.
The town will develop a multi-year plan for capital improvements, which
considers the town's development policies and links development proffers
resulting from conditional zonings with the capital plan.
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The town will coordinate development of the capital budget with
development of the operating budget. Future operating costs associated
with new capital projects will be projected and included in operating
budget forecasts.
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The town will make use of non-debt capital financing through the use of
alternate sources, including proffers and pay-as-you-go financing. The
goal of the town is to finance 25% of the current portion of construction
and acquisition costs of capital assets, improvements, and infrastructure
(in excess of proffers) through the use of such non-debt sources.
SECTION V. Debt and Cash Management
Debt Management
The town will not fund current operations from the proceeds of borrowed
funds and will confine long-term borrowing and capital leases to capital
improvements, projects, or equipment that cannot be financed from
current financial resources.
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A RESOLUTION: ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
The goal of the town is to finance 25% of the current portion of
construction cost of capital improvements (in excess of proffers) from
current financial resources. The amount provided in cun'ent resources may
be applied equally to all projects or only to specific projects.
The town will, when financing capital improvements or other projects or
equipment by issuing bonds or entering into capital leases, repay the debt
within a period not to exceed the expected useful life of the project or
equipment. Debt related to equipment ancillary to a construction project
may be amortized over a period less than that of the primary project.
The town is cognizant of its higher than average debt burden and should
continue to offset its impact through rapid payback. An average payback
of at least 60% in ten years should be maintained except for projects with
a known revenue stream.
The town will annually calculate target debt ratios. The town's debt
capacity shall be maintained within the following primary goals:
Debt service expenditures as a percentage of governmental fund
expenditures should not exceed 15%.
Bonded debt of the town shall not exceed 2.5% of the total
assessed value of taxable property in the town nor 3.5% of the total
personal income of residents of the town.
The town will follow a policy of full disclosure in every annual financial
report and financing official statement/offering document.
The town will maintain good communications about its financial condition
with bond and credit rating institutions.
Cash Management
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The town will maintain an investment policy based on the Government
Finance Officers Association model investment policy, and the investment
policies and procedures of the director of finance shall become a part of
this policy.
The town will, where permitted by law, pool cash from its various funds
for investment purposes and will invest revenue to maximize the rate of
return while maintaining a low level of risk.
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A RESOLUTION: ADOPTING A FISCAL POLICY FOR THE TOWN OF LEESBURG.
SECTION VI. Reserve Funds Management
The general fund undesignated fund balance at the close of each fiscal
year should be equal to no less than 15% of general fund expenditures.
The utilities fund undesignated fired balance at the close of each fiscal
year should be equal to no less than 300% of operating revenues.
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The town will maintain an appropriated contingency account not to exceed
1.5% of general fund revenue to provide for any supplemental
appropriations or other unanticipated expenditures.
PASSED this 11th day of January_ 2005,
ATTEST:
Cerk df-Council
R05: Fiscal Policy