Budget Process Overview

The City of Arroyo Grande prepares a Bi-Annual City Budget. The Bi-Annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America for governmental funds. The two-year budget is legally adopted for all funds by the City Council prior to July 1 of odd years. The budget is an important document because it serves as staffs recommendation, and ultimately the Councils direction, for the work program for the two-year period.

The Citys current Bi-Annual Budget is balanced and continues to fund the high quality of services provided to the community. The Citys Budget is a flexible-spending plan, which commits resources to the accomplishment of City Council goals and objectives. City Council approval is required for changes impacting fund balance, i.e. increases to appropriations that are not offset by matching increases to estimated revenue. Approval is also required for all budget transfers between departments/divisions that alters fund balance.

The Financial Services Department prepares Quarterly Budget Status Reports. These reports are used to keep the City Council informed of key budget issues, forecasts, and required changes. Quarterly budget reports are normally scheduled for the second City Council meeting in October (First Quarter), the second meeting in February (Mid-Year), and the second meeting in May (Third-Quarter). A fourth quarter report is not issued, rather the Audited Financial Report is the medium used to report final balances.

I. Users Guide to the Operating Budget

Every two years, the Financial Services Department coordinates the preparation of three key documents:

1. Operating Budget
2. Capital Improvement Program
3. Long-Range Financial Plan

The Operating Budget, Capital Improvement Program and the Long-Range Financial plan are combined to become the Two Year Budget.

1. Operating Budget

The Operating Budget is summarized at a department level. Department budgets report related operations and programs aimed at accomplishing a broad goal or accomplishing a major service. Every effort has been made to present the budget in an easy to read format.

The Operating Budget is divided into ten sections: (1) Budget Message; (2) Citywide Budget (All Funds); (3) General Fund; (4) Special Revenue Funds; (5) Enterprise Funds; (6) Agency Fund; (7) Internal Service Fund; (8) Capital Improvement Program; (9) Long-Range Financial Projections; and (10) Appendices. The Citywide Budget Section reports projected fund balances, appropriations, estimated revenues, and transfers for all City operations. The fund summary, the revenues, and the expenditures for each fund are reported within the applicable section.

2. Capital Improvement Program

The Capital Improvement Program is presented as a separate section in this document. The section matches funding sources with capital expenditures while developing a five-year schedule of projects.

The Capital Improvement Program section contains information in the following categories:

• Current Projects projects that were approved by the City Council in prior fiscal years.
• Approved Projects projects that are expected to begin during Fiscal Years 2007-08 and 2008-09.
• Future Projects projects that will begin during Fiscal Years 2009-10 through 2010-2011.

Each project has been assigned an identification number that will remain with the project throughout its life. The project identification number allows the tracking and monitoring of projects over multi-year periods. The sequential numbers do not represent the priority of each project. Project priority is determined by the needs of the community.

3. Long-Range Financial Plan

The Citys Long-Range Financial Plan represents the Citys continued commitment to planning long-term to meet future needs. The purpose of the Long-Range Financial Plan is to serve, as a financial planning tool to address funding needs over a 10-year period rather than on an annual or bi-annual basis. This better enables the City Council and staff to view the long-range financial implications of decisions before they are made, to identify future needs and how to address them through long-term strategies, and to better adjust to fluctuations in the economy. The long-range financial plan forecasts that revenues will be sufficient to meet important needs over the next 10-year period, although sluggish sales tax growth, rising personnel costs due to the high cost of housing and medical benefits, and reduced building permit revenue from slowing construction activity are all identified as concerns important to monitor.

For your convenience, the Citys Bi-Annual Budget has been broken down by section and each of the documents listed can be viewed in PDF format:

Table of Contents (226 Kb)

Section 1 - Budget Message (366 Kb)

Section 2 - Citywide Budget (1.28 Mb)

Section 3 - General Fund (2.37 Mb)

Section 4 - Special Revenue Funds (1.63 Mb)

Section 5 - Enterprise Funds (0.62 Mb)

Section 6 - Agency Fund (69 Kb)

Section 7 - Internal Service Fund (56 Kb)

Section 8 - Capital Improvement Program (3.04 Mb)

Section 9 - Long Range Financial Plan (405 Kb)

Section 10 - Appendices (1.39 Mb)