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HomeMy Public PortalAbout2009_08_11_R092 - Amending the Fiscal Policy# i r*{.Nib€.~~.... t ~. s':.~ ~I [`~.~~I~~ it I'IZF5IiN'I'1;D:~'~u~iist 1 I, 2tl©9 RESOI_UTIt7N NC). 2(}ft9-Q92 t\DC?PTlvl3; Atzartst 1 I, 2tiQ9 .4 I2TuS~Z,UTIt3N; ANIF,NI?ING THE FISCAL P~LiC1' P(~it `i'I1E TO~~'~l (}lr LL;JGSI3IJ12G wHF;1t1;AS, the •1'011%n ~ C?t7nLit Gild Z'd1v71 1~'Iaii£1~T~1' ai'G T'lSj3anS11}ff: to tilt ~I'a~~'n Qf Leesburg residents and taxpay-~ers to carcfult}~ ~7ccount I'or all public funds, to manrige ToFVIl 'finances wisely, and is plan for the adecltrate funding of services; acid WIIF,REt~S, a fiscal policy is designed. to establish guidelines anti goals to pr~orrrote llie frseaf well-being of the Town and to provide gua~lanee to the Town Managor, and WHF,tt1;AS, a fiscal l3olicy that is adopted, adlier'ed to, and r'egulai'l}' rec<ieti~eel and {ilxlated as necessary is recognircd as the cornerstone af`prtrdeni la7taircial nrarage7nent acid Wldi';IiE;r1S; ei"festive fiscal p{alicy sliorrld strive to prarnote financial stability by tstablisliing .clear, concise, nrid consistent gt7idc litres; to direct attention to the total frnancal pictine of the Town rather .titan la single issues, to prc~niate Elie view of lurking long-t~rrn financial piarrning 1~~ifh day-today tzpei'ations; fo'pravide the Town Couticil, Town hrlanagei~, residents, and taxpa}-et•s with a fiatnetivark for mcasrring the itnpact of services .against establishedfisca} g{tidefi7ies; taaoniribeifesignifieantl}= ta'tlie `I`own'sabilit3~ to shield itself fi~oiii fiscal crises; and to €;iiliance short- and Iang-term credit availability by helping to achieve and narrtain the Iiighcst credit arsd bond rattrgs possible:; arld ti~,tHE:RFAS,'tlie "fou~is Gounciltind "i'ownR~lanager will 7eviezv the acfoptedliscal policy peilo{3ically and #Iie Tot~,~n Ccri7ncil will approve atiy significant changes. -2- A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG THEREFORE, RESOLVED by the Council of the Town of Leesburg in Virginia as follows: SECTION I. Accounting, Auditing, and Financial Reporting a. 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. b. 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. c. The Town will annually 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 Mana eg ment a. 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. c. The capital budget will provide for the acquisition of fixed assets and the conshuction, 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 Mana eg ment General Fund a. The Town will maintain a diversified and stable revenue structure to protect it from short-run fluctuations in any one-revenue source. P:V2esolmionsUtesolulions 2009\0811 FiscalPolic}•Amend2009.doc 8/12/2009 -3- A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG b. The Town will estimate its annual revenues by an objective, analytical process. c. 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 ifpre-established recovery goals are being met. d. The Town will follow an aggressive policy of collecting revenue. e. 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. Utilities Fund f The Town will strive to set water and sewer rates based on the actual cost to deliver each service. The Town will periodically review the components that make up the rates and fees through acost-of-service study for every service provided. However, nothing in this policy shall prohibit the Town from establishin¢ fair and reasonable rates that provide for a differential between in town and out of town customers. g. The Town will set rates to achieve a positive net income and cash flow each year. h. The Town will set rates to cover all current costs and to allow the fund to meet all bond, state, and Federal requirements. If a deficit between current revenue and current expenditures occurs, the Town will take all necessary steps to reduce and eliminate said deficit by reducing e~enditures or enhancing revenues including additional water service ~ortunities while ensuring adequate capacity in water and wastewater facilities within the utilities service area is maintained. P:U2esolutionsU2esolu~ions 2009\0811 FiscalPolicyAmend2009.doc 8lI2/2009 -4- A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG i. dated 5-year forecasts of operating and capital budgets. j. Based on the 5-year forecasts, the Town will attempt to implement any required rate increases in a gradual and predictable manner and avoid large, one-time rate increases. k. As cash reserves and revenues permit, the Town will establish a rate stabilization reserve or other similar innovative approaches to mitigate the need for annual rate increases. SECTION IV. Budget Mana eg ment Operating Budi;et a. The Town, to maximize planning efforts, intends to prepare the operating budget with amulti-year perspective. b. 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. c. The Town will fiord current expenditures with current revenues and use nonrecurring revenues for nonrecurring expenditures. d. It is important that a positive undesignated fund balance and a positive cash balance be shown in all governmental fiords 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. e. 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. f 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. P:Vtesolu/ions\Resolutions 2009\0811 FiscalPolicyAmend2009.doc 8/122009 -5- A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG g. Budgetary reviews by the Town Council and Town Manager will focus on the following basic concepts: 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 Pro rams -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 Budget h. The Town will make all capital improvements in accordance with an adopted capital improvements program. i. The Town will develop amulti-year plan for capital improvements, which considers the Town's development policies and links development proffers resulting from conditional zonings with the capital plan. j. 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. k. 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 Mana eg ment Debt Mana eg ment P:Utesolutions\Resolutions 2009\0811 FiscalPolicyNnend2009.doc S/12/2009 -6- A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG a. The Town will not fund cun•ent 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. b. The goal of the Town is to finance 25% of the current portion of construction cost of capital improvements (in excess of proffers) fiom current financial resources. The amount provided in current resources may be applied equally to all projects or only to specific projects. c. 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. d. The Town is cognizant of its higher than average debt burden and should continue to offset its impact tluough rapid payback. An average payback of at (east 60% in ten years should be maintained except for projects with a known revenue stream. e. 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 persona( income of residents of the Town. f The Town will follow a policy of full disclosure in every annual financial report and financing official statement/offering document. g. The Town will maintain good communications about its financial condition with bond and credit rating institutions. Cash Mana eg ment h. 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. P:Utesolu~ionsUtesohrtions 2009\0811 FiscnlPolicyAmend2009.doc 8/12/2009 =q_ a R~sc~t,u~i IQ~; a~t[:~~t'tic; Tt~, rt~ctaL 1'ot;tcv t~~ox Tttr rc~w~i eat' t~l~rst~r?R i. The Town u•i11, where permitted by tau; poaLcash fiarn ifs varioils finds for hrveslment purposes anti will inycst revenue to maximize the rate of return while maintaining a tow level of risk: SF,CTIC)N VI. Reserti~e I^imds Nlana€~eiiiei3l ~. The .general hmd undesignatecl fund. balance nt the close of each fiscal year should 1~e equal to no less thali 15°1° of general fetid expenditures. >~. c. The Tawti will maintain nn appropriated eontrngeney aceourtt not #o exceed 1.~°l0 of general tiuid revenge to provide fcrr any supfiiemeiital appropriations or other unaiitici~ated expenditures, Pr1S51Jt) thsll`" clay cf Au~TtiSf2fl09. e ~ ~ ~ v .. ~. ~~'~` 3 ~l~risteii'~. Umstattd, Rxlayc?r r'" Town ~f Leesburg ATT~;ST: f} j" r ~ r~)~l C~ G1pik of Gouiicil P.'.Rc~oluts°gs~Resolunt n~ 2009it~3 L 7 I•~sgalPotieyflmegd3pG9,dpc S1t2IZf104 The utilities fetid undesigniifed Rind baatice at the close of each fiscal year should ~e egpal to do 1es~ Fhatr X90 Ifi~°fo of operat>srg re~~enues