Citizen ' s Budget Guide
Your Municipal Budget
The General Fund is made up of operations such as administration , public safety , parks and recreation and public works , and is supported largely by local property taxes and State-shared revenues .
An important concept of this report that you will notice when reviewing the budget is the Town ’ s fund balance . Fund balances are probably the least known and understood aspect of a municipal budget . Generally speaking , a fund balance is similar to a savings account composed of money left over from previous years ’ budgets .
“ Fund balance is similar to a savings account for local governments , providing a source of cash during emergencies and budget shortfalls .”
Fund balances exist primarily because North Carolina ’ s balanced budget laws require towns like Garner to plan their annual budgets in a very conservative manner - both in estimating revenue and spending amounts .
Fund balances serve both as operating reserves for emergencies such as natural catastrophes like ice storms and tornadoes and a source of cash during periods of cash shortfall ( for example , the major portion of property tax revenues are not normally received until mid-fiscal year ).
State law requires municipalities to maintain fund balances . The minimum amount of money to be kept in these reserves is established by a state agency called the Local Government Commission , which is responsible for regulating and monitoring the financial practices of North Carolina municipalities .
Although the actual amount of the reserve will vary according to each community ’ s needs , one thing is certain , maintaining an inadequate fund balance not only can leave a municipality ill-prepared for emergencies , but can also adversely affect its credit ratings or force the municipality to reduce services to meet unforeseen financial obligations .
The Town will commit , or set aside via Council resolution , some portion of fund balance for future major expenditures such as land purchases , equipment acquisition and construction projects . The Town also will commit funds to projects as required matching funds to secure federal or state aid for major construction projects .
Typically a government will set aside such funds when a town thinks it can delay the spending on a capital purchase for a few years . Its use is particularly ideal when a steady flow of revenue can be counted on year after year to use in financing certain capital outlays .
This practice allows the Town to level out the impact of large expenditures by spreading their costs over multiple years . Once Council adopts an ordinance to commit funds to a project , money may be accumulated in it through transfers from other funds and interest earned on investments .
15 2