General Financial Policies

In this section, you will find information on the City's financial policies related to the following topics:

1. Balanced Budget

A balanced budget provides the framework for obtaining fiscal sustainability and is achieved when total anticipated operating revenues equal total planned operating expenditures for each fund. Additionally, the City’s five-year Capital Improvement Program (CIP) is balanced in each year. This approach ensures that the City has sufficient financial resources to implement the CIP.

In accordance with Florida Statute 166.241, the City must adopt a balanced budget each fiscal year. The budget must be adopted by ordinance or resolution unless otherwise specified in the respective municipality’s charter. Pursuant to the Tampa City Charter, City Council adopts the budget annually by ordinance. The amount available from taxation and other sources, including balances brought forward from prior fiscal years, must equal the total appropriations for expenditures and reserves. At a minimum, as required by law and sound financial practices, the adopted budget must show budgeted revenues and expenditures for each fund by organizational unit, which are at least at the level of detail required for the annual financial report under Florida Statute 218.32(1). The adopted budget must regulate expenditures of the municipality and an officer of a municipal government may not expend or contract expenditures in any fiscal year except pursuant to the adopted budget.

2. Fund Balances

The City seeks to maintain a fund balance that is sufficient to fund all cash flow requirements, reserves for unanticipated one-time expenditures, revenue shortfalls, and emergency needs. Maintaining an adequate fund balance is essential to the financial health of the City and ensures the City’s ability to serve its citizens and maintain high credit ratings.

The purpose of this policy is to specify the size and composition of the City’s desired fund balance and to identify certain requirements for classifying fund balance in accordance with Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The following individual components shall constitute the fund balance for all of the City’s funds:

Non-spendable - Amounts that cannot be spent because they are:

“Not in spendable form” includes items that are not expected to be converted to cash (such as inventories’ prepaid amounts, long-term loans, notes receivable, and property acquired for resale).

Restricted - Fund balance that can only be spent for specific purposes stipulated by:

External resource providers such as creditors (by debt covenants), grantors, contributors, or laws or regulations of other governments; or

Examples include funds restricted by federal, state, and local legislation, bond covenants, grants earned but not spent, and taxes dedicated to a specific purpose.

Committed - Amounts that can only be used for the specific purposes determined by a formal action of either City Council and/or the Mayor. Examples include bond proceeds, non-ad valorem assessments, and revenues being accumulated to fund large capital projects.

Assigned - Includes spendable fund balance amounts established by the Mayor that are intended to be used for specific purposes that are neither considered restricted nor committed. The Mayor delegates the authority to assign fund balance to the Chief Financial Officer.

Unassigned - Represents fund balance that has not been assigned to other funds and has not been restricted, committed, or assigned to specific purposes within the General Fund. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.

3. Spending Order of Fund Balances

Fund balances may only be spent for authorized purposes. The City will expend fund balances in the following order:

Restricted Fund Balance (unless prohibited by legal documents/contracts such as grant agreements requiring dollar-for-dollar spending)

4. Reserve Policy - Governmental Funds

The reserve policies within this section apply to the City’s governmental funds which include the General Fund, Utilities Services Tax Fund, Special Revenue Funds, Debt Service Funds, and Capital Construction Funds.

General Fund and Utilities Services Tax Fund Reserves — The City has established a policy to maintain a minimum reserve balance that equals 20% of the combined operating expenditures for the General Fund and Utilities Services Tax Fund. The reserves may only be released by the Mayor.

Special Revenues Funds Reserves (Local Option Gas Tax Fund, Stormwater Services Assessment Fund, and Construction Service Center Fund Reserves — The City shall strive to maintain a 60 day operating reserve for each of these funds. Only personnel and operating expenditures are considered when calculating these operating reserves. These operating reserves may be released at the direction of the City’s Chief Financial Officer for authorized purposes.

Debt Service Funds Reserves — Debt service funds reserves shall include deposits as required by the bond covenants for each outstanding bond issue. The City shall make every effort to only transfer specific amounts, at specific times, as required under the bond covenants for each bond issue.

Capital Construction Funds Reserves — Capital construction funds do not require reserves. The annual transfer from the respective special revenue or other fund, plus interest earnings, should be sufficient to fund budgeted capital improvement projects.

5. Reserve Policy - Enterprise Funds

Operating Reserves — The Water, Wastewater, and Solid Waste departments will each maintain a minimum operating reserve equal to an average 90 days of actual operating expenses of the prior fiscal year. Optimally, the reserves should be sufficient to obtain and maintain the highest credit rating. These operating reserves may be released at the direction of the City’s Chief Financial Officer for authorized purposes within each respective department.

Infrastructure Reserves — The Water, Wastewater, and Solid Waste departments will each attempt to maintain an infrastructure reserve equal to 1% of total infrastructure assets as identified in the City’s latest Comprehensive Annual Financial Report. Each department director may request the release of all or a portion of the infrastructure reserves to fund capital improvement programs if there are insufficient current year revenues and/or budgeted reserves. The infrastructure reserves may be released at the direction of the City’s Chief Financial Officer for authorized purposes within each respective department.

McKay Bay Refuse-To-Energy Facility Reserve - The Solid Waste Department shall maintain a minimum $5.0 million reserve for the repair and renovation of the McKay Bay Refuse-To-Energy Facility. This facility reserve may be released at the direction of the City’s Chief Financial Officer for authorized purposes within the department.

The Parking System does not have a reserve requirement since operations may be subsidized by the General Fund. The Parking System shall attempt to maintain a 60 day operating reserve when net revenues become sufficient to fully support operations, maintenance, capital, and related debt service expenses.

The Golf Course System does not have a reserve requirement since operations may be subsidized by the General Fund. The Golf Course System shall attempt to maintain a 60 day operating reserve when net revenues become sufficient to fully support operations, maintenance, capital, and related debt service expenses.

6. Reserve Policy - Internal Service Fund

The City’s internal service funds (Fleet, Self-Insurance, and Consumer Services) shall maintain minimal reserves for the purpose of supporting services provided to City departments. Excess reserve balances may be returned to contributing departments at the end of each fiscal year.

7. Budget Stabilization Reserve

To the extent that unassigned fund balance in the General Fund exceeds 20% of operating expenditures, excess amounts may be designated as a Budget Stabilization Reserve to support subsequent fiscal year budget shortfalls. The Budget Stabilization Reserve is intended to allow for a measured drawdown of reserves with the expectation that revenues will return to sustainable levels in future budgets.

The City may designate any portion of fund balance in the General Fund as either assigned fund balance or committed fund balance with the intent to balance the subsequent year’s budget.

Balance Next Fiscal Year Budgets - Amounts designated to balance the next fiscal year will be designated as assigned fund balance. The amounts designated as assigned fund balance cannot exceed the budgeted excess of expenditures over revenues in the immediately subsequent year’s budget.

Balance Subsequent Year's Budgets - Amounts designated to balance subsequent years’ budgets (beyond the next fiscal year) will be designated as committed fund balance. The establishment and/or use of the Budget Stabilization Reserve will be recommended by the Mayor and approved by City Council as part of the annual budget process. Additionally, any Budget Stabilization Reserve that is deemed unnecessary to balance subsequent budgets may be re-designated as unassigned fund balance through the annual budget process. The BudgetStabilization Reserve may not be used during the course of the current fiscal year to cover revenue shortfalls or unexpected expenditures unless authorized by the Mayor.

8. Fees and Charges

The City will determine appropriate fees and charges for all services, operations, and maintenance of City facilities, and infrastructure. Fees and charges will be reviewed and updated to ensure that they keep pace with inflation and adjust for changes in state and/or local tax rates, methods, or levels of service. Fees and charges should not exceed the overall cost of providing the service, operations and maintenance expenses, and/or infrastructure costs for which the fee is imposed. Direct and indirect costs may be used in calculating fees.

9. Non-Recurring Revenues

To the extent feasible, non-recurring revenues will be applied toward non-recurring expenditures. By definition, non-recurring revenues cannot be relied on in future budget periods, and by avoiding the use of these revenues, the City minimizes the possible disruptive effects on services due to the non-recurrence of these revenue sources. Examples of non-recurring revenues include: sale of government assets, savings generated from a bond refunding, revenues from economic development, and grants. These revenues may be available for more than one year (e.g., a three-year grant) but are expected to be non-recurring. Examples of expenditures for which one-time revenues may be applied include start-up costs for stabilization, early debt retirement, and capital costs.

10. Revenue Forecast

The City budgets ad valorem taxes at 95% of estimated collection and all other major revenues at 98% of anticipated collection. Grant revenues and transfers are budgeted at 100% of the anticipated collection amount. The City employs a conservative approach in forecasting revenues for determining economic impact. Revenue forecasts are based on historical performance and available economic data.

11. Payment in Lieu of Taxes/Payment in Lieu of Franchise Fees (PILOT/PILOF)

Annually, the City charges the Water, Wastewater, and Solid Waste departments, and the Parking Division (collectively, the enterprise departments) for payment in lieu of taxes (PILOT) and payment in lieu of franchise fees (PILOF). These payments are collected and deposited in the General Fund. PILOT and PILOF charges are intended to replace General Fund revenues the City would receive if the enterprise departments were private sector operations. If the enterprise departments were private companies, they would pay property taxes and franchise fees.

Payment in Lieu of Taxes - PILOT is calcuated annually based on the prior year value of real property assets for each enterprise department times the City's current year millage rate.

Payment in Liew of Franchise Fees - PILOF is calculated annually based on annual revenues collected for each enterprise department times the currently authorized franchise fee percentage.

12. Cost Allocation

The City’s cost allocation plan is used to distribute the indirect costs incurred by its departments for various services or cost categories in reasonable proportion with the benefits provided for these services or cost categories. This cost allocation plan is revised annually to ensure accuracy for determining indirect costs, maintaining compliance for grant programs with the U.S. Office of Management and Budget (OMB) Uniform Administrative Requirements for Cost Principles, and audit requirements for Federal awards. The Revenue and Finance Department shall maintain a complete file regarding the cost allocation plan and supporting documentation.

13. Revenue Diversification

The City strives to diversify its revenue sources in order to maintain adequate levels of service during periods of economic decline through a variety of actions including:

Identifying new or expanded revenue sources to assist in achieving a balanced budget after considering all possible cost reduction alternatives;

Analyzing cost recovery revenue sources on an annual basis to ensure that revenue collections recoup the cost of providing the associated City services;

Actively opposing state and/or federal legislation which increase operating costs without providing a new revenue source or increasing an existing revenue source to offset the increased operating costs;

14. Capital Improvement Program (Five-Year Strategic Plan)

The City of Tampa develops a five-year capital improvement program (CIP) annually in support of the City’s mission and strategic plan. The CIP is a plan that forecasts and aligns projected revenues with capital project priorities and planned capital improvement expenses for maintaining, enhancing, and expanding City infrastructure needs over a five-year period. The CIP is updated and submitted to City Council for adoption annually ensuring that new and/or changing priorities are addressed. Projects are subject to change based on level of service standards and needs, special funding opportunities, emergency requirements, or other directives or priorities established by the Mayor and City Council. Because priorities may change, planned projects included in years two through five of the program are subject to annual appropriation.

The CIP is designed to promote long-range financial planning and provide for capital projects to be carried out in accordance with predetermined priorities of need and affordability. Specifically, the CIP:

Identifies the need for public facilities in support of the City’s adopted level of service (LOS) standards and measurable objectives;

The CIP includes estimated costs and the funding sources for each project. The CIP must be adopted concurrently with the City’s annual budget prior to the commencement of the fiscal year (October 1). Program managers are responsible for developing methods of assessing assets and determining costs and prioritization for new, repair/upgrades, or replacement projects in order to secure funding.

The benefits of the capital improvement program are as follows:

Relates public facilities to other public and private development, and redevelopment policies and plans;

Coordinates the activities of neighboring and overlapping units of local government to reduce duplication;

The five-year CIP must be financially feasible and provide both the project’s funding source(s) and capital costs. The CIP also identifies anticipated post-construction operational costs of each project by fund.

Capital improvements are provided to correct existing deficiencies, repair and replace deteriorating or obsolete facilities, and to accommodate new growth in an efficient, cost effective, and timely manner upon plan adoption. These capital improvements generally have an estimated cost greater than $100,000, have a useful life of greater than three (3) years, and fulfill one of four purposes:

Protect the public health and safety by preventing a critical breakdown in the City’s public facilities and services;

City Council adopts the 5-year CIP (capital budget) on an annual basis. However, sources of funding are only appropriated for year one (1) of the CIP. Years two (2) through five (5) of the CIP are only programmed and will receive annual appropriations during the adoption of subsequent annual capital budgets by City Council. The CIP, showing estimated annualized costs of capital projects, is updated on an annual basis.

All amendments made during the current fiscal year must be approved by City Council. A capital project cannot be added or deleted without approval of City Council; neither can funds be added or deleted which change the outcome of the project without City Council approval. However, funding may be amended administratively within previously authorized program categories.

All capital project costs will include the corresponding operating budgetary impact at the time the project is presented for City Council approval.

15a. Basis of Accounting

The City uses the modified accrual basis of accounting for governmental funds and accrual basis of accounting for proprietary and fiduciary funds

15b. Basis of Budgeting

The City generally follows the Basis of Accounting when budgeting. However there are several exceptions:

The City budgets the following items within the proprietary and fiduciary funds for transparency purposes:

The City does not budget the following items within the proprietary and fiduciary funds:

16. Administratively Re-Appropriating Prior-Year Budgets

The Chief Financial Officer is delegated to administratively re-appropriate prior year appropriations in the following circumstances.

Contracts Authorized by Council by which the City Provides Progress Payments to the Vendor for Completion of Tasks (i.e., studies, master plans)

The amount that is administratively re-appropriated is calculated based on the following:

Capital Improvement Projects and Grant Programs: The amount to be re-appropriated shall be the September 30th value of encumbrances and the value of each project’s available balance.

Purchase of Capital Equipment and Contracts: The amount to be re-appropriated shall be the September 30th value of encumbrances.

17. Budget Amendments

The City of Tampa’s adopted budget may be modified by Budget Amendment either through Council authorization or administratively. The City of Tampa’s Charter Articles 7.07 and 7.08 and Florida Statutes govern the process for amending the budget.

Council Approved Budget Amendments - A Financial Resolution is required when:

Increasing or decreasing a fund’s total appropriation by either recognizing new revenues or transfer of funds;Realigning appropriations between budgetary category (Personnel, Operating, Capital, Grants & Aids, Transfers, and Reserves) excluding the Community Redevelopment Agency (CRA), grant, and Capital Improvement Project (CIP) funds, as these budgets are adopted by program/project; and

Administrative Budget Amendments - The use of an administrative budget amendment is appropriate under the following conditions:

Realigning appropriation authority between capital projects within the same department, fund, and program (if applicable);

The City Attorney has determined a Financial Resolution is not required when moving funds within the Community Investment Tax (CIT) Fund. The Hillsborough County Ordinance that was approved by referendum approving the CIT requires the City to develop a series of five-year CIT plans (e.g., FY97- FY01, FY06-FY11, etc.). The City then allocates the five-year plan’s funding into program areas (e.g., Parks and Recreation, Fire, etc.). A Financial Resolution is not required when moving funds within the CIT’s plan within the same program area. In this case, an administrative budget amendment can realign the funds.

Office of the City Clerk - Ensures that both the final agenda and action agenda are posted on the City’s website.

18. Inter-Fund Transfers

The City fund structure requires the budgeting of inter-fund transfers to move cash between funds. The inter- fund transfer transaction must be properly budgeted and balanced. The outbound or expenditure inter-fund transfer and the inbound or revenue inter-fund transfer shall be in accordance with the State Uniform Chart of Accounts. Funds that may require Internal-Fund transfers include:

Enterprise Operating Funds and the corresponding Enterprise Capital Construction Funds and/or Debt Service Funds;