Thursday, March 13, 2008

The Budget Process

South Ogden City, like most cities, has a fiscal year that runs from July 1-June 30. This means we are currently just over 8 months into our current budget, but because of all the planning involved we have already started putting our next year's budget together.

Next year's budget will run from July 1, 2008- June 30, 2009. We call it our FY/09 (Fiscal Year) budget. Through the budgeting process we will take roughly 6 months to put this budget together for adoption. It must be noted that the budget is always a work in progress and is constantly scrutinized, but we have a process that allows us to go from planning stages to adopting a budget.

January 2008

This is a critical time in the budget process. The Mayor and Council will get together either in a work session or possibly a retreat to re-evaluate the state of the city. During this time the city will talk about their goals for the upcoming year, their five-year plan, capital projects, and the general fund budget amongst other things.

This year we looked at the five-year plan and decided what could be accomplished this year or at least which projects we will start since some of them might take a few years to complete. Capital projects are generally done using one-time monies. These projects could include parks, water and sewer lines, or one time purchases. Capital funds generally come from the surplus from the previous budget year. Most capital projects are part of the five-year plan or the capital facilities improvement plan.

Once the goals are stated and the projects are discussed it is time to start putting projects into the budget with their corresponding price tag. Usually we have a long list of projects and a small amount of money. The Mayor and Council prioritize these projects as funding allows.

February 2008

The City Manager and Finance Director meet with the individual department heads to discuss their budgets. The department heads are responsible for the spending of their budgets once they are approved. We have been fortunate in South Ogden to have department heads that keep within their budgets on a yearly basis. Most of what is discussed is the operating budgets and what they need in order to continue their level of service. It can be a difficult time as needs always outweigh the resources.

Meanwhile the City Manager and Finance Director work together to come up with the revenue projections. Since most of our monies are through taxes or fees we have to do our best research to forecast what these revenues are going to be. This is not an exact science but we have always done pretty well in forecasting our revenues.

Once department budgets are submitted and approved they are put into the overall budget of the city. We match the forecasted revenues with the expected expenditures to see if we can fund everything that is needed.

Some of the major issues that we look at every year:

Increased wages
Increased benefits (Mainly health insurance which has exponential increases every year)
New programs the city wants to implement
Utility rates
Funding for capital needs
Possible new employees to meet needs of city
Smaller projects that might need completed

Generally by the end of February we have a rough budget that will continue to need work to balance it.

March 2008

March is a time where you want your budget to be close to ready to go by the end of the month. The City Manager and Finance Director continue to massage the numbers as we look for trends coming from our current year budget. Department heads are continually looking at their budgets to create priorities in order to make sure their needs are met.

By mid-March we hold a budget work session with the Mayor, Council, City Manager and Department Heads. The first copy of the budget is submitted to the Mayor and Council and we start prioritizing our city needs. We will discuss in detail all of the issues that are noted above.

We discuss the need to keep our employees salaries and benefits at market value. We discuss exactly what projects we can fund this year and which projects we need to move another time. We discuss the need to possibly add personnel. We discuss at length the need to increase utility rates in order to keep up with the ever rising costs. We discuss programs that can make our city better.

Once this meeting is over the city staff has a good idea as to what the Mayor and Council want to get done this year. It is usually right in line with the goals that were set earlier in the year. Some tough decisions are made at this time. It's never easy to let something go, because of funding, that you know would be great for the city.

April 2008

April is a time to monitor the current budget once again to make sure that financial trends are going to be met in our upcoming budget. We also do some minor tweaking as certain issues tend to arise. This also allows us again to review the budget, goals, and projects to make sure we can meet the needs of the citizens. At times we might have another budget work session if the need arises.

May 2008

The city is required to adopt our preliminary budget by the first council meeting in May. We hold a public hearing to take public comment on the proposed budget. The preliminary budget is usually pretty close to our final budget.

Once again we constantly evaluate things and even make some minor changes, but fundamentally we are ready to go.

June 2008

The city is required to adopt its final budget by the last council meeting in June. We do have a public hearing again and if we don't have any changes then we adopt our new budget that night. By this time we have a document that has a lot of hours put into it. It has been reviewed, re-reviewed, scrutinized, and reviewed again. This budget shapes everything we do in the coming year.

July 2008

Our budget starts and we as staff start looking at the budget needs for the next year. Although the process gets pretty intensive for six months it really is a year-round process.

I hope this gives you an idea on how we budget. This blog entry is a simplification of the process, but I hope you can appreciate all the planning and work that goes into adopting the budget. If you would like to see a copy of our budget when it is adopted we are planning on making it available on the website or you can come into City Hall if you want a copy.