Page 69 - N. Richland Hills General Budget

INTRODUCTION

FINANCIAL PLAN

The Annual Budget and Capital Budget both serve as the financial plan for the City over the upcoming fiscal year
and outline significant infrastructure and equipment expenses identified in future years. This plan is guided
by the goals and objectives of the City Council and serves as a financial planning tool for management. In
addition it serves to guide the City in financing cost effective services, programs, and capital needs; and at the
same time focus on a stabilized tax rate and appropriate levels for fees and service charges as prescribed
by approved financial objectives. The annual audit, internal audits, and review of monthly financial
reports ensure the compliance of financial objectives.

Financial Structure

The City accounts for financial activities through fund accounting. A fund is an independent fiscal entity with
assets, liabilities, reserves, a residual balance or equity, and revenues and expenditures for undertaking
activities. Using these accounts, the revenues and expenditures (expenses) are budgeted and approved before
the beginning of each fiscal year by ordinance passed by the City Council. All of the funds of the City can be
divided into two categories: governmental funds and proprietary funds. Governmental funds are used for most
governmental activities, while proprietary funds cover cost through user fees. Listed below is a description of the
funds maintained by the City and included in this document.

Governmental Funds

General Fund - accounts for all financial resources except those to be accounted for in another fund. Resources
are generated by property tax, sales tax and other general taxes, franchise fees, fines, licenses and fees for
services. Operating expenditures provide support for most traditional tax-supported municipal services such as
Police, Fire, Parks and Recreation, Libraries, Neighborhood Services, Planning and Development, and Public
Works operations.

Special Revenue Funds - account for the accumulation and disbursement of legally restricted resources to
expenditures for a specific purpose. Funds in this category include Park & Recreation Facilities Development
Fund, Crime Control & Prevention District Fund, Promotional Fund, Special Investigation Fund, Drainage Utility
Fund, Donations Fund, Gas Utility Fund and Traffic Safety Fund.

Debt Service Funds - account for the accumulation of monies that are set aside to pay principal and interest on
debt incurred through the sale of bonds and other debt instruments. These bonds finance long-term capital
improvements to streets, utilities, and buildings.

Capital Project Funds - account for the accumulation of resources designated to construct or acquire capital
facilities and improvements. Resources include proceeds from the sale of general obligation bonds, revenue
bonds, and certificates of obligation.

Proprietary Funds

Enterprise Funds - account for operations financed and operated in a manner similar to private a business. The
intent of the City is that the cost of providing the goods or services to the general public on a continuing basis
will be financed or recovered through user charges. The City maintains the following enterprise funds: Utility
Fund (Water & Sewer), Golf Course Fund, and the Aquatic Park Fund.

Internal Service Funds - funds designed to account for charging fees to user departments to recover the full
cost of services rendered. The City’s internal service funds include the Equipment Services Fund, Building
Services Fund, Information Services Fund, and the Self Insurance Fund.

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