Local Budget Law for Fire Local Budget Law for Fire Chiefs and Fire District Chiefs and Fire District

DirectorsDirectors

Oregon Department of RevenueOregon Department of RevenueFinance & Taxation TeamFinance & Taxation Team

November 7, 2008November 7, 2008

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Department of Revenue Department of Revenue Supervision of Property Tax Supervision of Property Tax

SystemSystem

• Taxing DistrictsTaxing Districts• Local Budget LawLocal Budget Law• Property Tax Levy AuthorityProperty Tax Levy Authority

• County Assessors County Assessors • County Tax CollectorsCounty Tax Collectors• Taxpayers and Interested Taxpayers and Interested

PartiesParties

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Finance & Taxation TeamFinance & Taxation Team

• Local Budget Law TrainingLocal Budget Law Training• Budgeting ManualsBudgeting Manuals• Budget and Tax Certification FormsBudget and Tax Certification Forms• Telephone / e-mail Help DeskTelephone / e-mail Help Desk• Tax Certification ReviewTax Certification Review• Budget ReviewBudget Review• Ballot Measure ReviewBallot Measure Review

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Property Tax CycleProperty Tax CycleLocal Governments

Assessor

Tax Collector

Treasurer

Prepare budget. Impose tax.

Appraise property.Calculate tax.

Mail tax statements. Collect tax.

Distribute tax revenue.

June 30

Oct 25

Nov 15

Sep 25

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Purposes of Local Budget Purposes of Local Budget LawLaw

ORS 294.305 to 294.565ORS 294.305 to 294.565

• Standardize ProceduresStandardize Procedures• Describe Programs & Fiscal Describe Programs & Fiscal

PoliciesPolicies• Estimates of Revenue, Estimates of Revenue,

Expenditures & Expenditures & TaxesTaxes• Opportunity for Public InputOpportunity for Public Input• Control of ExpendituresControl of Expenditures

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Steps in Budget Process Steps in Budget Process

1.1. Prepare proposed budgetPrepare proposed budget2.2. Publish notice of budget committee Publish notice of budget committee

meetingmeeting3.3. Budget committee meets and approves Budget committee meets and approves

budget and property tax leviesbudget and property tax levies4.4. Publish budget summary and hearing Publish budget summary and hearing

noticenotice5.5. Hold budget hearingHold budget hearing6.6. Adopt, appropriate, levy & categorize taxAdopt, appropriate, levy & categorize tax7.7. Certify property tax levy to assessorCertify property tax levy to assessor8.8. Change budget during the fiscal yearChange budget during the fiscal year

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What is a Budget?What is a Budget?

• Financial Financial plan.plan.• EstimatesEstimates of Resources & of Resources &

Expenditures.Expenditures.• For For oneone fiscal year or one biennium. fiscal year or one biennium.

(July 1 - June 30)(July 1 - June 30)

Budget is basis for lawful appropriations Budget is basis for lawful appropriations

– – the authority to spend public the authority to spend public money.money.

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Step 1 - Prepare Proposed Step 1 - Prepare Proposed BudgetBudget

• Budget prepared by fund.Budget prepared by fund.

Fund:Fund: A self-balancing set of accounts used to A self-balancing set of accounts used to record resources and requirements for specific record resources and requirements for specific activities and objectivesactivities and objectives..

• Resources and requirements must Resources and requirements must balance.balance.

• All resources must be budgeted.All resources must be budgeted.

• Estimates must be made in “good Estimates must be made in “good faith”.faith”.

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Common Types of FundsCommon Types of Funds

• General Fund• Special Revenue Fund• Reserve Fund• Debt Service Fund

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Budget ResourcesBudget Resources

• Beginning Fund Balance / Cash on Hand

• Interest earned• Grants & gifts• Transfers in• Bond proceeds• Revenues from operations• Previously imposed property taxes• Current year property taxes

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Budget RequirementsBudget Requirements

• Personal services• Materials & services• Capital outlay• Debt service• Transfers out• Operating contingency• Reserved for future expenditure• Unappropriated ending fund balance

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Standardized Standardized Budget DetailBudget Detail FormatFormat

Past ActualPast Actual Current Current Future Future

Two Years Ago

2006-07

Last Year

2007-08

This Year

2008-09

Description of Budget Items

Budget For Next Year 2009-10

Proposed

Approved

Adopted

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Common Mistakes in Common Mistakes in Budget DetailBudget Detail

• Historic figures are not actuals.• Prior years, proposed, approved,

or adopted columns are missing.• Not all funds are shown in detail.• Resources are omitted

(e.g., prior year’s taxes or interest earnings).

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Common Mistakes (cont.)Common Mistakes (cont.)

• Contingency inappropriate for type of fund.

• Debt service fund contains expenditures other than debt service.

• Transfers-in not equal to transfers-out.• Resources don’t equal requirements.

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Step 2 - Publish Notice of Step 2 - Publish Notice of Budget Committee MeetingBudget Committee Meeting

“Publication” may be by:– Printing in a newspaper of general circulation.– Mailing by first class U.S. Postal Service to each

street address.– Hand delivery to each street address.

Publish 5-30 days before the first meeting. If using the newspaper, publish twice, at least 5 days apart.

In Washington County, submit for publication online.In Washington County, submit for publication online.

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Step 3 - The Budget Step 3 - The Budget CommitteeCommittee

• The board plus an equal number of appointed registered voters.

• Appointed members cannot be officers, agents or employees of the district.

• All members have the same authority.• Voters appointed for staggered 3-year

terms.

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Budget Committee ProcessBudget Committee Process

• All meetings subject to Public Meetings Law.

• A quorum is required to conduct business.

• A majority of committee must approve any action.

• Budget becomes public document when given to the budget committee. Copy available to public at office.

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Budget Committee Process Budget Committee Process (cont.)(cont.)

• At the first meeting, distribute the proposed budget to the committee (if you haven’t already) and hear the budget message.

• At least one meeting must include time for comments & questions from the public.

• Formally approve the budget and each tax levy.

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Step 4 - Publish Budget Step 4 - Publish Budget Summary & Notice of HearingSummary & Notice of Hearing

• Publish once, not less than 5 days or more than 30 days before the hearing.

• Use forms LB-1, LB-2 & LB-3, or a narrative.

– If < $50,000, you can post in 3 places for 20 days.

– In Multnomah County, submit budget to TSCC 20 days before hearing.

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Common Mistakes in Common Mistakes in PublicationPublication

• Date of Publication.• Arithmetic errors.• Typos• Tax amounts omitted or calculated

incorrectly.• Not all funds published.• Amounts not as approved by budget

committee.• Resources not equal to requirements.

Some errors can be corrected without re-publishing.

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Step 5 - Hold Budget Step 5 - Hold Budget HearingHearing

• Hold hearing on the date in the notice or reschedule & publish another notice.

• Hearing conducted by Board of Directors. • Hearing is on budget as approved by

budget committee.• Any person may appear for or against any

item.

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Board Changes After Board Changes After HearingHearing

After the hearing, the board may change budget estimates and tax amounts.

• If expenditures in any fund increase by more than 10% or $5000 (whichever is greater), or

• If taxes increase by any amount:

Republish the budget and hold another hearing.

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Step 6 - Adopt Budget, Step 6 - Adopt Budget, Appropriate, Impose Tax & Appropriate, Impose Tax &

CategorizeCategorize

After the budget hearing and before June 30, enact resolutions to:– Adopt the budget.– Make appropriations.– Impose taxes.– Categorize taxes by Measure 5

category.

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Lawful Appropriation Lawful Appropriation CategoriesCategories(ORS 294.435)(ORS 294.435)

• Personal Services• Materials & Services • Capital Outlay • Debt Service• Special Payments• Transfers• Operating contingency

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Resolution Imposing TaxResolution Imposing Tax

BE IT RESOLVED that the Board of Directors of the Sample RFPD hereby imposes the taxes provided for in the adopted budget:

at the rate of $4.2379 per $1,000 of assessed value for operations, and

in the amount of $20,000 for local option, and

in the amount of $97,396 for bonds.

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Resolution Categorizing the Resolution Categorizing the TaxTax

BE IT RESOLVED that these taxes are hereby BE IT RESOLVED that these taxes are hereby imposed and categorized for tax year 2006-07 upon imposed and categorized for tax year 2006-07 upon the assessed value of all taxable property within the assessed value of all taxable property within the district as follows:the district as follows:

General Government General Government Excluded from Excluded from LimitationLimitation LimitationLimitation

General Fund………..$4.2379 / $1000General Fund………..$4.2379 / $1000Capital Projects Fund …….... $20,000Capital Projects Fund …….... $20,000Debt Service Fund…………………………………..$97,396Debt Service Fund…………………………………..$97,396

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Common Mistakes in Common Mistakes in ResolutionsResolutions

• Amount adopted not equal to total in detail sheets.• Appropriation categories not lawful per ORS

294.435.• Appropriation not equal to amount in detail sheets.• Appropriation not made for all funds with

expenditures.• UEFB or “Reserved for Future” is appropriated.• Taxes levied exceed taxes approved by budget

committee.• Categorization of tax omitted or unclear.

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Step 7 - Certify Property Step 7 - Certify Property Tax LevyTax Levy

By July 15, give the county assessor:• 2 copies of Tax Certification (Form LB-50).• 2 copies of Resolutions.• 2 copies of any new tax election ballot

measure.

The LB-50 must match the resolutions (amount = amount or rate = rate).

By September 30, entire budget to County Clerk.

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Step 8 - Changes During Step 8 - Changes During the Fiscal Yearthe Fiscal Year

Budgets may be changed after adoption:

• By supplement budget if allowed by ORS 294.480.

• By board resolution if specifically authorized by ORS 294.326 or another statute.

• In some situations, not at all.

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Appropriation is a Limitation Appropriation is a Limitation - - ORS 294.435(4)ORS 294.435(4)

Appropriation gives authority to spend Appropriation gives authority to spend public money.public money.

““No greater expenditure or encumbrance of No greater expenditure or encumbrance of public money shall be made for any purpose public money shall be made for any purpose other than the amount appropriated, except other than the amount appropriated, except as provided in:as provided in:─ ORS.294.326 ORS.294.326 (exceptions)(exceptions)─ ORS 294.450 ORS 294.450 (resolution transfer)(resolution transfer)─ ORS 294.480 ORS 294.480 (supplemental budget)”(supplemental budget)”

[[andand others, e.g., others, e.g., ORS 294.455 ORS 294.455 (natural (natural disaster)disaster)]]

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Civil LiabilityCivil Liability- ORS 294.100- ORS 294.100

“Any public official who expends any public moneys in excess of the amounts or for any other purpose than authorized by law shall be civilly liable for the return of the money.”

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Change Budget Change Budget BeforeBefore Over- Over-ExpendingExpending

“The governing body shall make additional appropriations and may thereafter make additional expenditures as authorized by such appropriations.”

- ORS 294.480(3)

“A supplemental budget must be prepared and adopted before any expenditures are made in excess of the current annual budget appropriations.”

- OAR 150-294.480(3)

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Supplemental Budget Supplemental Budget – ORS – ORS 294.480294.480

A Supplemental Budget is Allowed if:A Supplemental Budget is Allowed if: • Occurrence or condition could not be

ascertained during the regular budget process.

• Unforeseen pressing necessity requires prompt action.

• Unforeseen State or Federal funds made available.

• Unforeseen, funded request for services.• Involuntary conversion, destruction or sale

requires immediate replacement.• Significantly more property taxes than

budgeted.• Local option tax passed in September.

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Supplemental Budget:Supplemental Budget:

• Must be adopted BEFORE over-Must be adopted BEFORE over-expenditures are expenditures are made.made.

• Good for the current fiscal year only.Good for the current fiscal year only.• Only one per incident or condition.Only one per incident or condition.• Cannot increase tax levy (except Cannot increase tax levy (except

September September local option).local option).• Is NOT allowed if the condition was Is NOT allowed if the condition was

known known during the regular during the regular budget process.budget process.

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Supplemental Budget Supplemental Budget ProcessProcess

Fund expenditures differ Fund expenditures differ lessless than 10%: than 10%:• Give notice with “sufficient detail”.• Notice not less than 5 days prior to meeting.• Adopt at regular meeting & make appropriations.

Fund expenditures differ Fund expenditures differ 10% or more10% or more:: • Notice includes summary of supplemental budget

changes.• Publish notice as for original budget, 5 to 30 days

prior.• Hold public hearing.• Close hearing, then adopt & appropriate.

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Transfer Appropriation within Transfer Appropriation within a Fund by Resolutiona Fund by Resolution – ORS – ORS

294.450(1)294.450(1)

From one From one existingexisting appropriation to appropriation to another.another. (e.g., “Personal Services” to “Capital (e.g., “Personal Services” to “Capital Outlay”)Outlay”)

Resolution must state:Resolution must state:• Need for transfer Need for transfer • Purpose of expenditure Purpose of expenditure • Amount of transferAmount of transfer

Resolution BEFORE spendingResolution BEFORE spending

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Transfer Contingency Transfer Contingency Appropriation within a Appropriation within a

FundFund – ORS 294.450 (2)– ORS 294.450 (2)

• Transfer to another existing Transfer to another existing appropriation.appropriation.

• Resolution before spending.Resolution before spending.

• Resolution transfers of contingency not Resolution transfers of contingency not to to exceed 15% of fund appropriations.exceed 15% of fund appropriations.

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Transfer Appropriation Transfer Appropriation Between FundsBetween Funds

- ORS 294.450 (3)- ORS 294.450 (3)

• Appropriation authority may be Appropriation authority may be transferred transferred from the General from the General Fund by resolution.Fund by resolution.

• Transfers may include resources. Transfers may include resources.

• Transfer from any other fund Transfer from any other fund requires a requires a supplemental supplemental budget.budget.

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Inter-fund Loans Inter-fund Loans – ORS 294.460– ORS 294.460

May be made from any fund except:May be made from any fund except:• Debt service fund or debt service reserves.Debt service fund or debt service reserves.• Constitutionally dedicated funds. Constitutionally dedicated funds.

Resolution must state:Resolution must state:• Funds involved and the amount of the loan.Funds involved and the amount of the loan.• If Capital Loan, repayment term (5 years max) If Capital Loan, repayment term (5 years max)

and and interest rate.interest rate.• If Operating Loan, repayment this budget If Operating Loan, repayment this budget

period or period or next.next.

Repayment in subsequent period must be Repayment in subsequent period must be budgeted.budgeted.

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Special Purpose Grant Special Purpose Grant Received in Current Budget Received in Current Budget

PeriodPeriod - ORS 294.326(3)- ORS 294.326(3)

•Unknown during regular budget Unknown during regular budget process.process.

•Only grants for specific Only grants for specific purposes.purposes.

•Appropriate by resolution.Appropriate by resolution.•Resolution BEFORE spending.Resolution BEFORE spending.

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Unforeseen Unforeseen Occurrence/Funded Occurrence/Funded

Request Request for Service for Service - - ORS 294.326(4)ORS 294.326(4)

• Declare: Unforeseen occurrence or Declare: Unforeseen occurrence or condition condition that could not have that could not have been budgeted; orbeen budgeted; or

• Unforeseen pressing necessity; or Unforeseen pressing necessity; or • Request for services to be paid for by Request for services to be paid for by

others, others, andand

• Funds are available from Funds are available from non-tax moneynon-tax money..• Resolution BEFORE spending.Resolution BEFORE spending.

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Bonds Approved in Bonds Approved in Current Budget PeriodCurrent Budget Period

- ORS 294.326(5)- ORS 294.326(5)

No budget change is required to expend No budget change is required to expend bond proceeds or make debt service bond proceeds or make debt service payments in the current year for:payments in the current year for:• Bonds approved by voters this fiscal Bonds approved by voters this fiscal year.year.

• Refunding bonds.Refunding bonds.

Expenditures in future years must be Expenditures in future years must be budgeted.budgeted.

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Natural Disaster Natural Disaster – ORS 294.455– ORS 294.455

Expenditures required by involuntary Expenditures required by involuntary conversion or destruction of property by conversion or destruction of property by civil disturbance or natural disastercivil disturbance or natural disaster

• Appropriate by resolution or supplemental Appropriate by resolution or supplemental budget.budget.

• From From any available sourceany available source of revenue of revenue (UEFB). (UEFB).

• If public health/safety requires prompt If public health/safety requires prompt action, action, and it’s not practical to convene the and it’s not practical to convene the

governing body, the chief executive governing body, the chief executive officer officer may authorize expenditure.may authorize expenditure.

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Questions?Questions?

Contact a Finance & Taxation Analyst:Contact a Finance & Taxation Analyst:

• Sandi King (503) 945-8669 sandi.l.king@state.or.us• Greg Kramer (503) 945-8262

gregory.a.kramer@state.or.us• Lee Peterson (503) 945-8338 lee.peterson@state.or.us• Gordon Tiemeyer (503) 945-8439

gordon.d.tiemeyer@state.or.us

Local Budget forms and publications: http://www.oregon.gov/DOR/PTD/localform.shtml

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