Page 73 - CityofSouthlakeFY26AdoptedBudget

Expenditures are budgeted according to when the liability is incurred, regardless of the timing of related
cash flow. The exceptions are debt service, compensated absences, claims and judgments, which are
budgeted as expenditures according to when the payments are due. The City’s basis of budgeting is the
same as the basis of accounting, as reflected in the Popular Annual Financial Report.

Fund Accounting

Funds are unique to governmental type agencies. In the corporate world, “Funds” do not exist. The Budget Basics
company receives revenues and writes checks to pay for its expenses and reports them for the company
as a whole. Governments handle this process differently.

The City of Southlake has over 50 funds with specific purposes which are defined by federal, state, or
local laws. They include the General Fund which is used for general City operations, the Utility Fund
which is used to support the City’s water, sewer, drainage, and solid waste service, and a multitude of
Special Revenue, Debt Service Funds, and Capital Project Funds. Simply stated, funds are set up like
separate companies which must operate under specific parameters.

For example, the City receives $0.02 of sales tax for every dollar spent in our city limits. One of those
pennies goes to the General Fund and can be spent on general operating costs, like supplies, salaries,
and general maintenance. The other penny is split between our Crime Control and Prevention District,
the Community Enhancement and Development Corporation, and the Southlake Parks Development
Corporation. These three units of the City of Southlake were voted on by the residents, but state law
determines how that money is spent. The City can only use it for the purposes outlined in the original
referendum presented to the voters, so the separate funds were set up to account for the revenues and
expenditures of each unit.

In another example, the City receives proceeds from bonds issued for various projects. The Official
Statement for a bond issue outlines how much money the City will receive, how that money will be
repaid, and how the money can be spent. This document is legally binding on City officials and is
enforced by federal, state, and local laws. If the Official Statement says we received $12,000,000 for
roadway improvements, City Council and management may not opt to spend it on equipment or
supplies. The money is recorded in a Capital Project Fund for roadway improvements and can only be
spent on roadway improvements.

Although these examples are for three very specific funds, the same concept of expense restrictions
applies to all funds. As a result, reporting revenues and expenses for the City of Southlake includes
over 50 miniature financial statements in addition to a Citywide financial statement. It may appear that
money is available to spend when in fact the majority of the money is restricted by law.

HAVE A BUDGET Contact the City Manager’s Office at (817) 748-8400
COMMENT OR QUESTION? or TalkToUs@cityofsouthlake.com

FY 2026 City of Southlake | Budget Book 73