Page 73 - Watauga FY21 Budget

BUDGET OVERVIEW

x Fund Balances: Maintain fund balances in the various funds at sufficient levels
to protect the creditworthiness of the City and protect the financial position from
emergencies.
¾ General Fund Undesignated Fund Balance: The undesignated fund balance
should be maintained at or above 25% of expenditures.
¾ Retained Earnings of Other Operating Funds: Positive retained earnings shall
be maintained in enterprise operating funds in order to ensure that sufficient
reserves are available for emergencies and revenue shortfalls. In the Water
and Sewer Enterprise Fund, an operating reserve will be established and
maintained at or above 20% of the current year’s budget. The reserve is
calculated as total budget less debt service and capital project expenditures.
Special revenue funds such as Watauga Economic Development Corporation
and Crime Control and Prevention District Fund should maintain positive fund
balances and each respective Board should approve the amount to be
retained each year.
¾ Use of Fund Balance/Retained Earnings: Fund Balance/Retained Earnings
should be used only for emergencies, major capital purchases, or non-
recurring expenditures that cannot be provided by savings in the current year.
Should the use reduce the balance below the appropriate level,
recommendations will be made by management on how to restore the
balance to its designated level.

x Capital Expenditures and Improvements: Review and monitor the condition of
capital equipment and infrastructure, establish priorities for replacement and
repair based on needs and availability of resources.
¾ Capital Improvement Program (CIP): An annual review of the need for capital
improvements and equipment should be conducted. This review should
evaluate the status of infrastructure, its replacement and repair, and any
potential new projects. Prioritize all projects, both on-going and proposed,
based on an analysis of current needs and resource availability. All
operations, maintenance, and replacement costs should be listed for every
capital project.
¾ Scheduled Replacement of Capital Assets: An annual schedule shall be
prepared for the replacement of non-infrastructure capital assets. As
resources are available, these assets shall be replaced according to the
schedule.

¾ Capital Expenditure Financing: There are three methods of financing capital
requirements:
o Current revenues.
o Fund balance/retained earnings, as allowed.

o Debt.

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