HomeMy Public PortalAbout2015_01_27_R018 Amending the Fiscal Policy The Town of
Leesburg,
Virginia
PRESENTED: January 26, 2015
RESOLUTION NO. 2015-018 ADOPTED: January 26 , 2015
A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
WHEREAS, the Town Council and Town Manager are responsible to the Town of
Leesburg 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 the adopted fiscal policy
periodically and the Town Council will approve any significant changes.
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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
b. 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 principles for governmental entities as
promulgated by the Governmental Accounting Standards Board.
c. 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 Management
a. The Town will capitalize all fixed assets with a value greater than$5,000
and an expected life of two 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
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
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.
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
b. The Town will conservatively 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 if pre-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 a cost-of-service study for every
service provided. However, nothing in this policy shall prohibit the Town
from establishing 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 covenant, 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
expenditures or enhancing revenues including additional water service
opportunities while ensuring adequate capacity in water and wastewater
facilities is maintained.
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
i. The Town will track, monitor, and report quarterly on the key variables of
the rate model. Also, the Town will set rates that are based on annually
updated 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 to ensure predictable and sustainable rates
over the long-term, while providing sufficient funding for maintaining
system infrastructure.
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. Further, the Town shall evaluate rates
regularly, to include increases if necessary, to avoid large one-time
increases, and maintain infrastructure.
SECTION IV. Budget Management
Operating Budget
a. The Town, to maximize planning efforts, intends to prepare the operating
budget with a multi-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 fund current expenditures with current revenues and use
nonrecurring revenues for nonrecurring expenditures.
d. It is important that a positive unrestricted 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 unrestricted 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.
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
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.
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 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 Budget
h. 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.
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
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
SECTION V. Debt and Cash Management
Debt Management
a. 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.
b. The Town shall make use of non-debt capital financing through the use of
alternate sources, such as but not limited to proffers, pay-as-you-go
financing when financially feasible, investment income, and
intergovernmental sources. The goal of the Town is to finance a minimum
of 25% of the current portion of construction cost of capital improvements
(in excess of proffers) from current financial resources which. The amount
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 through rapid payback. An average payback
of at least 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 personal 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.
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
g. The Town will maintain good communications about its financial
condition with bond and credit rating institutions.
Cash Management
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.
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.
SECTION VI. Reserve Funds Management
a. The goal of the Town is to progressively increase the fund balance
incrementally to achieve a general fund unassigned fund balance the
close of each fiscal ycar should be equal to no less than 15% 20% of
general fund expenditures, after taking into account planned reserves for
debt service and capital asset replacements, per the Town's long-term
sustainability plan. Upon achieving this level of general fund unassigned
fund balance, the Town shall continue to maintain such a level at the close
of each succeeding fiscal year. Use of the fund balance may be necessary
from time to time to meet unexpected revenue shortfalls or financial
emergencies. By policy, appropriations from the fund balance require a
majority vote of the Council. No appropriation from the fund balance will
occur without prior presentation to the Council by the Town Manager of a
plan and timeline for replenishing the fund balance to its minimum level
within at least a 24 month timeframe.
b. The utilities fund unrestricted fund balance at the close of each fiscal year
should be equal to no less than 75% of operating revenues including the
ninety (90) day operations and maintenance (O&M) reserve, and will
pursue the necessary steps to achieve one percent (1.00%) repair.,
replacement, and rehabilitation (3R) reserve, excluding availability fees,
over subsequent fiscal years.
c. 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.
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A RESOLUTION: AMENDING THE FISCAL POLICY FOR THE TOWN OF LEESBURG
PASSED this 27th day of January, 2015. _.
U stattd, Mayor
Town of Leesburg
ATT'
Clerk of Coun
P:\Resolutions\2015\0127 Amending Fiscal Policy.docx