Comprehensive Annual Financial Report - City of Santa Monica

five-year forecasts, and an understanding of the initiatives being undertaken by the entire organization. In
June 2008, the City Council adopted the following fiscal policies to help provide critical analysis and sound
review for budget development decisions.
General Policies
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The City will maintain sound financial practices in accordance with state law and direct its financial
resources towards meeting the City’s long-term goals.
The City will maintain and further develop programs to assure its long-term ability to pay the costs
necessary to provide the level and quality of service required by its citizens.
Operating Budget Policies
● The City will adopt a balanced budget annually by June 30.
● Current revenues will be sufficient to support current operating expenditures.
● The City will estimate revenues using an objective and analytical process; in the case of assumption
uncertainty, conservative projections will be used.
● The City will forecast its General Fund and other major fund expenditures and revenues for a fiveyear
period and will update the forecast annually. The forecast will be taken into consideration when
preparing budget recommendations.
Revenue Policies
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The City will endeavor to maintain a diversified and stable revenue system to minimize the shortterm
fluctuations in any one revenue source.
The City will avoid targeting revenues for specific purposes, whenever possible, allowing maximum
flexibility in funding decisions on an annual basis.
One-time revenues will be used for one-time expenditures only.
User fees will be adjusted annually by CPI and reviewed at least once every five years to ensure that
fees recover the costs of providing services.
The City will investigate potential new revenue sources, particularly those which will not add to the
tax burden of residents and local businesses.
The City will work proactively with the League of California Cities and local communities to monitor
legislation that may impact the City financially.
Expenditure Policies
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The City will maintain a level of expenditures that support the essential services and promote qualityof-life
to its citizens.
Each enterprise fund should reflect the true costs of operation, including direct and indirect charges
for services.
Debt Policy
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Capital projects may be funded on a pay-as-you-go basis or using debt proceeds. Capital budgeting is
limited by the availability of revenues and bond proceeds. The ability to meet debt service
requirements will act as a ceiling on capital programming. Because capital expenditures produce
long-term benefits, they can appropriately be funded by debt, which can lead to a more equitable tax
burden across generations of citizens and taxpayers. However, pay-as-you-go financing provides
flexibility when the economy or revenue growth slows. Therefore, the City’s goal is to maintain a
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