Final Adopted Budget FY23-24

BUDGET AND FINANCIAL POLICIES

Revenue Policies Revenue estimates are set at realistic and attainable levels and are updated and revised as needed. The City periodically reviews specific programs and services identified as potential candidates for user fees. Where appropriate, user fees will be set at a level sufficient to recover the full costs of the program or service. The City's Enterprise operations shall set their enterprise fees at a level sufficient to recover the full costs of enterprise operations. The City maintains an investment portfolio in which 100% of all idle funds are invested daily. Capital Improvements Program The City shall annually develop a Capital Improvements Program (CIP) to be adopted in conjunction with the Annual Operating Budget. The City shall appropriate all funds for capital projects with an ordinance in accordance with state statutes. Operating expenses for all capital projects are estimated and accounted for in the Capital Improvements Program. Capital expenditures included in the CIP are projects that will cost at least $100,000 and have a useful life of at least 10 years. Equipment purchases are considered operating expenses and are not included in the CIP. City Council will annually set level-of-service standards for the quantity and quality of capital facilities and criteria for the evaluation of capital project requests. Debt Management Policies The City incurs debt only for financing capital assets that, because of their long-term nature or due to budgetary constraints, cannot be acquired from current resources. Debt financing can include general obligation bonds, revenue bonds, certificates of participation, lease/purchase agreements, special obligation bonds, or any other financing instrument allowed under State of North Carolina general statutes. Interest income is credited to the Debt Service Fund. This will allow interest income to offset debt service costs. The City maintains a Net Debt Per Capita ratio for all debt at no more than $3,000 and for general obligation debt at no more than $1,000. Net Debt Per Capita measures the burden of debt placed on the size of the population supporting the debt. Net Debt Per Capita is a widely used measure of an issuer’s ability to repay debt. The City maintains a Debt as Percentage of Assessed Valuation ratio of no more that 4% for all debt and no more than 2% for net bonded general obligation debt. Debt as Percentage of Assessed Valuation measures debt levels against the property tax base which generates the tax revenues that are the main source of debt repayment. The State of North Carolina sets a maximum ratio level of 8% of net bonded debt to the assessed valuation for a city or county. The City monitors the municipal bond market for opportunities to obtain interest savings by refunding outstanding debt. The estimate for net present savings should be, at a minimum, 2.5% to 3.0% of the refunded maturities before a refunding process begins. Water Resources Financial Policies The Water Resources Fund maintains a debt service coverage ratio of approximately 2.0. Debt Service Coverage Ratio compares net income available to service debt to annual debt service requirements. Water Resources Fund balance will be maintained in the range of 35% to 50% of the operating expenses and debt service for the current operating year budget. “PAYGO,” or Pay As You Go, financing will be a consistent strategy for water and sewer infrastructure investment. The City currently includes approximately 35% to 50% of PAYGO funding from water rates and charges.

Adopted 2023-24 Budget

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