RES 2009-34 SHORT TERM BORROWING FROM THE WATER FUNDRIESOLUTION'NO, 2009-34
A RESOLUTION of the City of Bainbridge Island,
} Washington, establishing a consolidated set of
IL
updated financial and budget policies,
supplementing, superseding, amending and/or re -
certain policies adopted by the City
during or prior to 2009.
WHEREAS, the City Council (the "Council"} is responsible far setting financial policy for the
City of Bainbridge Island (the "City"); and
WHEREAS, the Counci*1 wishes to update, rescind, amend and/or re -affirm several financial and
budgetary policies that were i'ni'tially adopted by the'Cl"ty during'or prior to 200'9; and
WHEREAS, the Council wishes to establish an ongoing consolidated set of Financial and
Budget Policies (the "Budget Policies" ) to be administered by the City Administration (the
"Administration") and toguide Council action on an ongoing basis.
THE CITY COUNCIL OF THE CITY OF BAINBRJDGE ISLAND DOES RESOLVE AS
FOLLOWS:
SECTION 1. BUDGET POLICIES
7
I-11 Adoption
There is hereby established a consolidated set of Budget Policies, in accordance with this
Resolution. Such Budget Policies shall be documented in a consolidated manner for ease of
reference by City Council, Administration and the public. Once adapted, the Budget Policies
replace and supersede all budget, finance and debt policies previously adopted by -the Council..
1.2 Review and Amendment
The Council's Finance and Personnel Committee ("Finance Committee") shall, with the support
of the Administration, review the Budget Policies not less frequently than' annually, and shall
recommend any necessary or appropriate amendments to the Council,, for approval by simple
majority. In 2010 and later years, the Finance Cominittee shall, by .March 3 1, recommend any
proposed amendments, and the Council shall act an any such proposals by April 3Q. Prompt y
after Counci'l' approval of any am'endm'ent of the Budget. Policies, the Administration shall
publish restated pages of the Budget Policies incorporating any such amendments
SECTION 2. APPLICABLE LAW,, CITY CODE AND COMPRIEHENSIVE PLAN
2.01 RCW. Chanter 3 5A. 33
Chapter 35A.33 of the Revi'sed'Code of Washington ("RCW"), pertaining to budgets for Code
- Cities, is hereby incorporated by reference, as it may
be amended frmiotme to time.
2.626 BIMC Chapter 2.82 Y- Citv Budget Process
IP
(a) Cit Budget Process. Effective with the biennial budget of 2009-10, and
thereafter, the provisions of Chapter -2.82 of the Bainbridge Island Municipal Code
("BIMC"} that contemplate an annual budget process shall be superseded by a biennial
budget process.
(b) Even Years. In each even-numbered calendar year, starting in 2008, tie Council
shall adapt a budget for the following year and endorse a budget for the nett ensuing
even -numbered year.
(c) Octd Years. In each odd -numbered calendar year, starting in 2009, t ie Council
shall, with. -the advice and assistance of the City Manager, review and revise the
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reviouslY endorsed budget and shall adopt, - not later than December 3 1, a bet for the
.ensuing year.
{d) Budget Calendars.. By January 31 of each year, starting in 2010, the Co�incil, with
the advice and assistance of the. City' Manager,, shall approve an annual calendar or
schedule for the process of preparing and adopting any Capital [Facilities Plan il-; date, and
the one or two- ear budget whichever is applicable under the biennial Cyt e}. Such
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calendar may be amended at any tithe by the Council, and the current version otany such
calendar or schedule shall be considered to be included i*n the Budget olicies by
reference. _.
2.3. Applicable Provisions of BIMC IncorjRorated Yy Reference
These .Budget Policies incorporate by reference the provisions of the City's Mun'.:,,,,':ipaI Code.
(BIMC) that are applicable to the budgetary and fjnancial policies and practnces of the'cityw
2.4. ComRrehensi*ve Plan- CaDi*tal Facilities Goals and Policies
The Capital Facilities Goals and Policies that are stated in the City's Comprehensive Plan, as
amended from time to time are hereby included 1"n full in the Budget Policies.
SECTION 3: MONITORING, ANALYZING AND. PROJECTING
3.1 Monthlv. Oand Mid -Year Bud et Re orts
On a monthly basis, the Administration shall make available to the Finance Conunitf6e a report
of the year-to-date revenues and expenditures through month-end of the reported moA. against
b''Idget, and shall reportto the Finance Committee any rr�aterlal trends and unexpected
developments. The Administration shall furthermore report monthly on the. year -to ;date status
(through the end oe reported month} and the annual forecast of cash inflows and outflows,
including a projec#ion of end -of -year cash balances. Moreover', starting with the second quarter
of 2009, the quarterly end-mofwmonth reports for March, June,, September and December shall be
more detailed and shall include a variance report on the City's larger capital projects. The rnid-
year report through June 3 0 shall provide comprehensive details and summaries and _shall be
accompanied by the Administration's. mid -year report. Each such report for the year-to-date
through a reporting month shall be presented -to Othe Finance Committee not later than the first
F iComriaittee meeting occurring inancen the second month following the reporting month.
3.2 Financial Cap#KiiiIAnaysis,
(a)' In General. Based an the schedule stated'in' the annual budget. ca- lendar approved
by Council, the Administration shad deliver to' Council a ten-year Financial Capacity
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Analysis.,. depicting (i") detailed revenue and expenditure forecasts for the current year and
also i'ncludi'ng (ii) the three pxior years, and (iii) projections for the ensuing six future
years. The Administration shall present to. Council one or more updated Financial
Capacity Analysis versions not later than the dates stated on the Council's budget
calendar.. The purposes of the Financl*al Capacity Analysis shall be (i) to enable Council
to utilize this data to analyze and evaluate the long-term fiscal impacts of up to date cash
forecasts and current budget choices, decisions and policy options, and (ii) to meet the
requirements of Growth Management Act for a Financial Capacity Analysis to
accompany the Capital Facilities Plan."
(b) Conservative Forecasts. For each Financial Capacity Analysis, the
Administration shall prepare each such analysis as follows: (I*) underlying economic and
financial assumptions shall be reasonable and shall take into account an appropriately
chosen set of inflation factors and an appropriate set of'economi'c projections from
recognized governmental or professional bodies, and (ii) all projections of re�enues for
future years, and all adjusted estimates for the current year:, will be conservatively
forecasted. The Administration's chosen assurnptians for revenues, expenditure inflation
factors and economic measures shall be disclosed to the Council. The City's revenue
esti'mates will be realistically forecasted and will employ revenue policies which prevent
undue or unbalanced reliance on any one revenue source. The City's budget amendment
process shall be used to adjust speculative revenue estimates when they become certain
and- measurable. City tax -supported funds revenue forecasts shall not assume growth
rates that exceed general inflation (Seattle Tacoma CPI -U for December of the prior
year). Real growth that exceeds inflation will be recognized through the City's budget
amendment process.
SEC ION 4. RESERVES
411111 Eme, gency Rai nv Day Reserve
Section 1 of Resolution No. 2008-01, establishing an Emergency Rainy D''11111''111 ay I eserve within the
City's General Fund, and providing for the budgetary target amount for such a reserve,, is hereby
included in the Budget Policies. Effective January 1, 2009, it is the Council's policy that the
Emergency Rainy Day Reserve shall be treated as a Restricted Reserve, which shall ideally be
funded as, and when resources:, such as from the sale of surplus property, become'avai"lable.
4.2 on ingency Reserve
Section 2 of Resolution No, 2008-01, establishing a Contingency Reserve within the City's
General Fund, and providing for the funding of such a reserve, is hereby included in the Budget
Policies. When adopting a budget, the Council shall determine whether or not there are adequate
revenues to support a Contingency.Reserve,, and, if so, the amount of the Contingency Reserve
shall not be great-er than the limitations unposed by Resolution Na. 200 8-0 1 and State haw.
4.3 Reserves — Generally
(a) Restricted Reserves. Each restricted reserve shall b'e accounted for on' the City's
books, and may not.be- obligated or expended by the Administration i*n the absence of a
vote of Council. The City's General Fund restricted reserves -(as of 2049) are:
• General Fund: Emergency Rainy Day Reserve
General Fund: Police Investigations Reserve
• General Fund: Marineopefat" Reserve
• General Fund: Suyematsu Sinking Fund
• General Fund'. Public Arts
(b) Desi'gnated Reserve. Each designated reserve will be a budgetary allocati'on tha#
isaccounted for on the City's books, and mai be expended by the Administra tan solely
for the designated. purpose for which the reserve is established. The City's G�� eral Fund
Designated Reserves (as of 2009) are:
• Reserve for Purchase of Development Rights (Agriculiuraf)
• Equipment Reserve
4.4 Working Capital
"Working Capital" shall mean the dollar amount of unencumbered cash balances,,., excluding
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amounts held i*n Special Funds or in restricted reserves. Working Capital shall also `fat include
any balances dedicated to capital project obligations carried over from one year to t 'e next., or
any bond -funded balances dedicated to capital projects stated in the bond offering ocuments.
The target for end -of -year Working Capital for the tax -supported funds, for each year 1rom 2409
onward, shall be an amount equal to two months of tax-supported fund recurring revenue. For
this purpose, recurring revenue" shall exclude revenue earmarked for pri
"ncipal and interest on
voter -approved bonds or LID indebtedness.
SECTION S. REVENUES AND. EXPENSES
541 Funds and Subfunds
For purposes of GASB reporting, the, City's fands shall be those enumerated from OOI to 90 1, as
shown on the City's most recent audited or unaudited annual financial report. However, for
purposes financialof the Administration's management and cash management re-borting to
Council, the Administration will report revenues and cash inflows), expenditures (and cash
outflows), and balances, under the following fund categories:
• Tax -Supported General Funds:
■ General Fund
■ Street Fund
The subftmds of which shall be the following:
■ REET Fund
■ GO Bond Fund
■ Capital Construction Fund
■ Development Services Fund
■ Clearing Fund
■ General Lang Term Debt Fund
LID Capital Construction Fund'
L11) Bond Fund.
• Tax-Supported Special Farads: The subfunds of w].11
ch shall bee the following:
■
C ivic Improvement Find (.LTAC)
■ Affordable Housing Fund
■ Expendable Trust Fund
■ Agency Fund
• Water Utility Fund
Sewer Utility Fund
�
S S WM Utility Fund
5.02 In General
Resolution' Nos. 2006,w35 and 2006--#41'are hereby rescinded and are replaced by this Section 5.
Statements in this subsection 5.2 apply to both the tax -supported and utility funds of the City:
(a) The City shall use major one -tine revenue to fixed capital improvements, debt
reductions,, contingency funds or reserves. The use of one-time revenues to fund
'operating expenditures is discouraged..
(b) The City shall maintain a structure for all fees and charge's where the beneficiary
of the service pays the cost of that service except to the extent that the City Council has
determined that provision of the specific service
iin queston provides a general public
benefit. The Council shall review, at least annually, the Administration's recommended
policy for the allocation of City costs to various funds.
(c) The City is authorized to allocate up to three percent (3%) of unrestricted
.revenues of the tax -supported and respective utility funds for replacement of capital
equipment as deemed appropriate by the Administration.
5.3 For Utility Funds
(a) In 2010 and thereafter the City shall maintain separate reserves for each utility
fund, as follows:
( i ) Ca)ital Continency Reserve. This design
ated reserve shall have a
� targeted level (by December 2411 and thereafter) of at leapt one percent (1%) of
the utility system's fixed assets (at book value). The primary purpose of the
reserve is to provide a ready source of cash in case of an emergency, should a
major piece of equipment or a portion of the utility's infrastructure fail
unexpectedly. This reserve holds debt proceeds, system participation fee
revenues, system reinvestment fianding from rates, and any transfers of surplus
cash reserves from the operating account.
Operating Reserve,. This designated reserve shall have a targeted level as
of each year-end of at least forty-five (4S) days.' .operating expenses in the cases
of the sewer and stormwater funds, and at least sixty (GO) days in the case of the
water fundt' TheP rimarY purpose of the Reserve is to provide cash for
in case of seasonal variations in revenue or expenses, or ta support OpeVitions in a
year in which. revenues are abnormally low. Because water usage. fob irrigation,
and therefore water revenues, are. particularly sensitive to a year s weather
Platterns, the reserve requirements for the water fund are set higher t�ian for the
other two utilities.
(iii} Restricted Debt Reserve. To the extent that the City issues a form of debt
(e.g. Revenue Bonds) that requires the municipality to maintain a restricted cash
reserve during the term of the debt repayment period., the utility shall maintain a
restricted reserve, for such purpose. This reserve is to safeguard the puchasers of"r
the. utility's debt, and may be used to fund the final i*nstallment or last dar's debt
service,,
(b) The City will maintain water, sewer and stormwater utIlity rates aq
equate to
ensure that each of the three uti*lity funds is fully self-supporting.
5.4 For TaxwhSupported Funds
(a) Departmental revenues of the tax -supported funds shall be considered hrestrl'cted
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revenue of the City --- subject to any applicable legal restriction, and subjoct to any
applicable -provision. of the Budget Policies, that may apply to a Parti4cuiar revenue
source.
(b) Revenues from the City Parking Lot and Commercial Parking Lot Trac shall be
treated as revenues of the Streets Fund.
(c) Annually, the City shall ideally (to the extent revenues permit) alloc fe at least
Eight Hundred Thousand Dollars ($$00 ,000) (in 2009 dollars, adjusted f6. inflatiwon
thereafter) to help fund road preservation projects. For years after 2009, the ashDOT
inflation factor will be used to adjust for inflation.
(d) BEET revenues shall be first applied to current capital debt service an d then,, to
the extend available, to current capital projects.
(e) Building and Development Services (B &DS) revenues shall. 6e maintained at a
level that contributes no less than seventy-five percent (75%} of expenditures on a
planning basis for the B&DS Fund.
(f} Organizations that are not part of the City, but which receive fundi*n fro m the
City for .contractual -services, shall not have their appropriation carried forward from year
to year unless expressly authorized under the terms of a contract approved by Council:
Contractual documents,may include inter-Iocal agreements, memorandums of agreement,
contracts or othe'rforms of agreement. Except as expressly stated contractually to the
cohtrary- annual 'review and reauthorization by the Co
unciI of ny'such funding shall be
required.
SECTION 6. EXPENSES PERTAINING TO PERSONNEL
6., 1 Ci S.taf1riLng Levels
{a} Authorized Liml*t ,on FuI14=Time Equivalent Fmployes. The City's overall
authorized level- of staffing shall be not greater than' 127 in 20'100
(b) Monitoring. • The Administrationincshall lude a report of the number of FTEs,, by
Department, i*n each month's regular year-to-date revenue and expenditure report to the
Finance Committee. For each position vacated'year,,6to-d te and each carry-over vacancy
to be re -filled, the Administration shall report: whether the position is intended to be re-
filled,,
and, 1"f so, whethe'r r from internal or extemal app licants.,
(c) City Manager's Discretion to Approve Part-time Service. Nothing in the
assumptions that underlie the Adrninistraft"on's estimates of full-time equivalent
CMployees, %r a bud get year -shall eliminate the City Manager's discretion to encourage
and/or.agree to one or more employees performing on a part-tir�ae basis (e.g. 84% or other
percentage) rather than a fallmtiome basis during part oralI of a budget year.
6.2 COffinensa i
on and BenefiIts
(a) Prior -Compensation and Benefits Policies. Except'as provided below, the
compensation and benefitipolices approved by the Council in 2007 (or any pL F Lrior year}
are rescinded.
(b) Comparison of Compensation and Benefits. In 201 Q, the City Administration Sha
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compare the cash COMpensation, and the value of benefits, for City employee positions to
the compensation and benefit level's of approximately a dozen comparable cities in
Washington, to provide data for potential compensation and benefit policies which may
be adopted by the Cou'nci'l from time to time.
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(c) Training and Staff Develo Ment Expenses. The City is authorized to allocate up
to 0.5% of unrestrl*cted revenues of the tax -supported and respective utility funds to
professional training and development for staff as deemed appropriate by the
Administration.
SECTION 7., DEBT
7.1 Debt Policy
The C'ty's Debt Policy, as it may be amended from. time to time, is hereby included. in the
Budget Policies,,
SECTION 8. STRATEGIC PRIORITIES
The budget shall be built on an understanding of the priorities of governmeni, and a co'nmitment
by the Council and Administration to an, ongoing process of identifying_ and implementing
st-rategic priorities of government (as described1"n Benchmarking Critical Recomme�idations 2
and 3,, and the Strategic Priorities section of these Budget Policies).
SECTION 9o- INVESTMENT
The provisions of BIMC 3.12 {Ittvestments) are incorporated by reference-.
SECTION 10. BANKING SND MONEY MANAGEMENT
10.1 safe
_k
The City shall engage in rela'tionshPis, and conduct its business, with one or adre banks,nks,
repositories of pUblic 'pooled: funds,, and financial institutions in a manner that avoids
concentrating City'balances in a way that may expose the City to material losses in t.1L6 event of
an adverse development affecting any bank or financial institution in which City assets are held.
1Q.2 Mon' Management
The City Administration shall seek to form relationships with banking and financial im. - fistituti" on s
0
that.o�ferr the
Cj-
y eff caent and efFective tools anc�, technologies to` manage .and track frh'nsactions
and balances.
PASSED by the Ciiy Council this 21St day of December 2009.
APPROVED by the Mayor phis tis` day of December 2009.
ATTEST/AUTHENTICATE:
10 big lb
Rosalind D. Lassoff, City Clerk
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
RESOLUTION N04:
Christopher Snow, Mayor
December 15, 2009
December 21, 2009
2009,,1,34