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Local Budgeting Manual, 150-504-420 - Oregon State Library - State ...

Local Budgeting Manual, 150-504-420 - Oregon State Library - State ...

Existing Appropriations

Existing Appropriations in Resolution General Fund Utility Fund Administration $50,703 Personal Services $112,730 Police 131,103 Materials & Services 118,700 Fire 27,170 Capital Outlay 1,000 Nondepartmental: Transfer/Truck Transfer/Debt Service 2,462 Reserve 7,500 Contingency 5,000 Total $221,476 Total $234,892 Total Appropriations $456,368 Because of the required repair of a major water leak, $2,000 of “contingency” in the General Fund will be transferred to the Utility Fund, and the budgeted transfer to the Debt Service Fund out of the Utility Fund will not be made. Step 1—Intrafund Transfer General Fund Appropriation Transfer Existing Changes Adjusted Administration $50,703 -0- $50,703 Police 131,103 -0- 131,103 Fire Nondepartmental: 27,170 -0- 27,170 Transfer/Truck Reserve 7,500 -0- 7,500 Contingency 5,000 (2,000) 3,000 Transfer/Utility (new) -0- 2,000 2,000 Total $221,476 -0- $221,476 The General Fund contingency appropriation of $2,000 is transferred to the newly created appropriation category of “transfer to the Utility Fund.” This creates a new requirement and allows the transfer of $2,000 of the General Fund resources to the Utility Fund. Utility Fund Appropriation Transfer Existing Changes Adjusted Personal Services $112,730 -0- $112,730 Materials & Services 118,700 -0- 118,700 Capital Outlay (increased) 1,000 2,462 3,462 Transfer/Debt Service (reduced) 2,462 (2,462) -0- Total $234,892 -0- $234,892 The Utility Fund debt service transfer appropriation is moved to capital outlay. Step 2—Interfund Transfer Appropriation Transferred from General Fund and Received in Utility Fund Adjusted Changes Final Personal Services $112,730 -0- $112,730 Materials & Services (increased) 118,700 $1,500 120,200 Capital Outlay (increased) 3,462 500 3,962 Total Utility Fund Resources $234,892 $2,000 $236,892 Transfer from GF (new) -0- $2,000 $2,000 The Utility Fund is increased in appropriations and resources so the additional expenditures can be made. Total Appropriations After Transfers General Fund $221,476 Utility Fund 236,892 $458,368 58

Borrowing and Interfund Loans Interfund Loans Local Budget Law allows a local government to loan money from one fund to another. ORS 294.460 allows local governments to borrow internally, provided such a loan is authorized by an official resolution or ordinance. The resolution or ordinance must state the fund from which the loan is made, the fund to which the loan is made, the purpose of the loan, and the principal amount of the loan. If interest is to be charged, this fact should also be stated in the resolution or ordinance. If the loan is an operating loan, this action must provide that the loan will be repaid to the fund from which it was borrowed by the end of the fiscal year, or be budgeted for repayment in the coming fiscal year. If the loan is a capital loan, the resolution or ordinance must set forth a schedule under which the principal and interest is to be budgeted and repaid. It must also state the rate of interest. Capital loans must be repaid in full within five years of the date of the loan. If the loan will be repaid in the current fiscal year, no other action by the governing body is necessary to repay the loan. The current budget is not adjusted to show the loan transaction. The local government’s accounting records will show the loan and repayment. If the loan will be repaid in the coming fiscal year(s), the loan repayment must be budgeted and separate appropriations established for the repayment. Do not show the loan amount as a deficit resource [OAR 150-294.361(1)(B)]. This is not an acceptable budgeting practice. Loans may not be made from debt service funds. Loans may not be made from moneys credited to any fund when, under applicable constitutional provisions, the moneys are restricted to specific uses unless the purpose for which the loan is to be made is a use allowed under such constitutional provisions. Also, loans made from debt service reserve funds created to provide additional security for outstanding bonds or other borrowing obligations are limited to amounts that are in excess of the amount the municipal corporation has covenanted to maintain in the reserve fund. Short-Term Notes Local governments are permitted to secure short-term notes or issue warrants to meet current expenses, or to retire bonds or warrants and their interest, whenever provided for in an adopted budget (ORS 288.165). Loan amounts are limited to 80 percent of the property taxes not yet received by the local government in that fiscal year. The loan may also include up to 80 percent of the full amount of any other budgeted or unpledged revenues the governing body will receive during the fiscal year. Before any formal action is taken by the governing body, ORS 288.165 should be studied for more information. 59 If the governing body obligates a local government beyond 12 months, the indebtedness could be considered an addition to the outstanding debt. Debts are generally restricted by the Oregon Constitution, statute, or charter. Any indebtedness (including bonds and notes) is governed by the general indebtedness limitations of the charter or statutes. Interest payments must be budgeted when a local government expects short-term borrowing (ORS 294.443). The loan and repayment schedule may be reported in narrative form or as a footnote to the budget. The narrative or footnote must indicate that the principal and payments are liabilities of the fund from which they are made. The principal and repayment need not be included as a budgeted resource or expense. Local Budget Law has no statutory limitations for any local government to enter into an installment contract. Local Budget Law does not authorize any local government to obligate itself to make payments beyond a period of more than one year. Any authority to enter into such an installment contract must be found in the statutes or charter of the local government. Supplemental Budgets During the fiscal year, circumstances may require expenses to be paid that were not budgeted. Or a district may receive revenue it did not plan for in its budget. A supplemental budget is required to pay the additional expenses and spend the extra revenue. Supplemental budgets are good only through June 30 of the fiscal year in which they are adopted. The supplemental budget must be adopted and appropriated before any additional money can be spent (OAR 150-294.480). Although a supplemental budget is usually associated with the expenditure of new appropriations and increased revenues, it can also be used for other purposes. For example, a supplemental budget is required when transferring revenues from a special fund to the general fund to increase existing appropriations. Preparing a supplemental budget does not authorize the governing body to impose additional ad valorem taxes [ORS 294.480(5)]. When Can a Supplement Budget Be Prepared? A local government may prepare a supplemental budget only if one or more of the following circumstances exists (ORS 294.480): • An occurrence or condition that was not known at the time the budget was prepared requires a change in financial planning. • A situation that was not foreseen at the time the budget was prepared requires prompt action. • Funds are made available by another unit of federal, state or local government; the funds were not known at the time the budget was prepared.

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