The Budget and Appropriation Process
The budget document is the instrument used by the budget-making authority to present a comprehensive financial program to the appropriating body. The legalistic view is that a budget is a plan of financial operation embodying an estimate of proposed expenditures for a given period of time and the proposed means of financing them. In a much more general sense, budgets may be regarded as devised to aid management to operate an organization more effectively. In the general sense, budgets are the financial expression of plans prepared by managers for operating an organization during a time period and for changing its physical facilities and its capital structure.
The budget preparation process for all Cities is governed by Massachusetts General Law (MGL) Ch. 44. The General Laws require that the budget be supported by revenues earned during the year plus any saving from prior years. The General Laws also requires public involvement in the process including the requirement for a public hearing on the proposed budget.
The Mayor provides leadership in the budget process by developing budgetary policy and working closely with department heads and the City Council to assure that the process identifies community needs and priorities and develops a farsighted and well-crafted plan. The Mayor initiates the budget process that provides the policy context for identification of priorities and development of initiatives. See article 5 of the Charter for the rules of the budget process.
The Water Fund was established under Chapter 41, § 69B January 2000, as a special revenue fund until 2008 when it was adopted as an Enterprise fund. Commencing July 1, 1994, the City established the Sewer Enterprise Fund in accordance with Chapter 44, § 53F ½, of the General Laws.
What is a Balanced Budget?
A budget is considered in balance when revenues are equal to or greater than expenditures. This is a requirement of all Massachusetts communities.
The Budget Format
The budget summary contains summary totals from all operating segments. The revenue section details revenue sources with expected trends. Each departmental section contains a department mission statement and financial data relating to the entire department, including personnel detail. The enterprise section includes revenue and expenditure trends of the self-sustaining enterprise funds along with departmental goals. The CIP section details all expected capital program outlays in the current fiscal year, as well as a summary of the next following years.
Budget Amendment Increases
Any increase to the budget must be submitted to the City Council by the Mayor for approval. Budget amendments usually occur from transfers from other special revenue funds (usually receipts reserved for appropriation funds), free cash appropriations in general fund, or retained earnings appropriations within the Enterprise Funds. They can also be voted as an additional appropriation to the budget to be offset by property taxes, local revenue, state aid, and reserves prior to the tax rate being set in December of each year.
Budget Amendment Transfers
Budget transfers within the school department are submitted to the School Committee for their approval, and are processed by the Finance Department once approved. Budget transfers for city (non-school) budgets, between departments must be submitted to City Council for their approval. Transfers between personnel to ordinary expenses for the same department require the Mayor’s approval with a report to the City Council. This is due to the fact that the City Council votes the original budget as follows:
City Budgets – The City Council votes each personnel and ordinary expenses line separately within each department
School Budgets - The City Council votes the TOTAL for the school budget, not separate departments and/or organizational units as they do for the City Budget.
The City of Greenfield adopted the Department of Revenue of Local Services Bulletin no. 06-209 from May 2006 Section C2. This section refers to the alternative year end procedure which allows budget transfer starting May 1 and ending July 15, upon recommendation of the Mayor, of any departmental appropriation to another department appropriation, not to exceed three percent of 5,000, whichever is greater, of the department’s annual budget. The Municipal Modernization Act (MMA) revised this bulletin to lift this cap effective November 7, 2016. The Finance Department will provide the City Council Ways and Means Committee with a list of these budget transfers in addition to the regular transfers.
Policy Drive Planning:
The budget is developed based upon community values and key city strategic financial and program policies. The City of Greenfield’s Five Year Financial Forecast provides the nexus between the long-term financial plan and budgetary development. The plan includes a comprehensive multi-year projection of the financial position and budget projections, including documentation of revenue and cost assumptions and projections.
Program of Services for the Community:
The budget is designed to focus of financial information, missions and goals that have value added outcomes to the community through city services. The Mayor and the City Council will use the City’s fundamental principles as a basis for allocation choices and policy discussions. It also provides a basis for measuring progress toward goals during the budget period.
Financial Plan of Allocation and Resource Management:
The budget establishes the plan and legal appropriations to allow the City to operate during the fiscal year. The budget provides specific direction for departments and agencies for management of resources. It also provides broad goals related to the City’s overall financial position and identifies business decisions required to keep the City financially viable and strong. It is developed using all available financial and planning reviews, including the Five Year Financial Forecast and the five-year rolling Capital Improvement Program.
The budget is intended to communicate to a broad range of readers, both locally and around the region, as well as the larger governmental and financial community. The budget expresses priorities and goals, assignments and plans, targets and hopes. It is a key statement of City priorities, and is meant to provide confidence in, and confirmation of, the Ordinance-mandated Mayor form of government.
Posted: Wed, Mar 22, 2017 01:16 PM
Updated Wed, Apr 7, 2021 12:00 AM