Page 408 - FY 2026-2027 Adopted Budget Book

FINANCING PROGRAMS. Where applicable, assessments, pro-rata charges, or other fees
should be used to fund capital projects, which have a primary benefit to specific, identifiable
property owners.

Recognizing that long-term debt is usually a more expensive financing method, alternative
financing sources will be explored before debt is issued. When debt is issued, it will be used to
acquire major assets with expected lives that equal or exceed the average life of its amortized
portion of the debt issue. The exceptions to this requirement are the traditional costs of marketing
and issuing debt, capitalized labor for design and construction of capital projects, and small
component parts which are attached to major equipment purchases.

INFRASTRUCTURE MAINTENANCE. The City recognizes that deferred maintenance
increases future capital costs. Therefore, a portion of the General Fund and Utility Fund Budgets
will be set aside each year to maintain the quality of the City’s infrastructures.

Replacement schedules should be developed in order to anticipate the inevitable ongoing
obsolescence of infrastructure.

In addition to infrastructure maintenance, the City will plan for the replacement of other assets
such as vehicles and equipment by establishing replacement schedules as needed.

VIII. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS

OPERATIONAL COVERAGE. The City will maintain a balanced budget whereby operating
revenues will be greater than or equal to operating expenditures.

Deferrals, short-term loans, or one-time sources will be avoided as budget balancing techniques.
Reserves will be used only for emergencies or non-recurring expenditures, except when balances
can be reduced because their levels exceed guideline minimums as stated in this policy.

FUND BALANCE POLICY. The primary purpose of this policy is to establish guidelines for
fund balance levels with the City of Bedford’s governmental and proprietary funds. It is essential
for the City to maintain adequate levels of fund balance to mitigate financial risk that can occur
from unforeseen revenue shortfalls, unanticipated expenditures, or any other adverse
circumstances. In addition, it also designed to provide the appropriate amount of working capital
for the City’s general operations.

DEFINITIONS:

Fund Balance. The difference between a governmental fund’s assets and liabilities, divided into
5 categories: 1) Nonspendable, 2) Restricted, 3)Committed, 4) Assigned, 5) Unassigned

Nonspendable. That portion of the fund balance that is legally or contractually required to be
maintained intact. In addition, nonspendable also means that portion is not expected to be
converted to cash, i.e. inventories, prepaids, long-term receivables.

Restricted. That portion of the fund balance that is constrained for a specific purpose by external
resource providers (such as grantors, bondholders, and higher levels of government) through
constitutional provisions, or by enabling legislation.