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H.B. 290

             1     

BUDGET CYCLE OF LOCAL GOVERNMENTS

             2     
1999 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: David M. Jones

             5      AN ACT RELATING TO CITIES AND TOWNS AND COUNTIES; ALLOWING CITIES AND
             6      COUNTIES TO BUDGET ON A BIENNIAL BASIS; REQUIRING CITIES AND COUNTIES
             7      THAT ADOPT A BIENNIAL BUDGET TO IDENTIFY SEPARATELY THE TAXES
             8      EXPECTED TO BE COLLECTED DURING EACH YEAR OF THE BUDGET CYCLE; AND
             9      MAKING TECHNICAL CHANGES.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          10-6-104, as enacted by Chapter 26, Laws of Utah 1979
             13          10-6-105, as enacted by Chapter 26, Laws of Utah 1979
             14          10-6-106, as last amended by Chapter 119, Laws of Utah 1985
             15          10-6-109, as last amended by Chapter 52, Laws of Utah 1981
             16          10-6-110, as enacted by Chapter 26, Laws of Utah 1979
             17          10-6-111, as last amended by Chapter 389, Laws of Utah 1997
             18          10-6-116, as last amended by Chapter 119, Laws of Utah 1985
             19          10-6-117, as enacted by Chapter 26, Laws of Utah 1979
             20          10-6-118, as last amended by Chapter 118, Laws of Utah 1989
             21          10-6-119, as enacted by Chapter 26, Laws of Utah 1979
             22          10-6-121, as last amended by Chapter 119, Laws of Utah 1985
             23          10-6-124, as enacted by Chapter 26, Laws of Utah 1979
             24          10-6-127, as enacted by Chapter 26, Laws of Utah 1979
             25          10-6-128, as enacted by Chapter 26, Laws of Utah 1979
             26          10-6-130, as last amended by Chapter 119, Laws of Utah 1985
             27          10-6-135, as last amended by Chapter 118, Laws of Utah 1989


             28          10-6-150, as last amended by Chapter 119, Laws of Utah 1985
             29          17-36-3, as last amended by Chapter 212, Laws of Utah 1996
             30          17-36-8, as last amended by Chapter 212, Laws of Utah 1996
             31          17-36-9, as last amended by Chapter 212, Laws of Utah 1996
             32          17-36-10, as last amended by Chapter 212, Laws of Utah 1996
             33          17-36-15, as enacted by Chapter 22, Laws of Utah 1975
             34          17-36-16, as last amended by Chapter 212, Laws of Utah 1996
             35          17-36-17, as enacted by Chapter 22, Laws of Utah 1975
             36          17-36-22, as last amended by Chapter 212, Laws of Utah 1996
             37          17-36-28, as last amended by Chapter 73, Laws of Utah 1983
             38          17-36-32, as last amended by Chapter 73, Laws of Utah 1983
             39          17-36-37, as last amended by Chapter 3, Laws of Utah 1988
             40          17-36-38, as last amended by Chapter 73, Laws of Utah 1983
             41      ENACTS:
             42          17-36-3.5, Utah Code Annotated 1953
             43      Be it enacted by the Legislature of the state of Utah:
             44          Section 1. Section 10-6-104 is amended to read:
             45           10-6-104. Withholding of state money from cities not filing budget or complying with
             46      reporting or auditing requirements.
             47          (1) The state auditor [is authorized to] may withhold state money allocated to a city for its
             48      failure to [annually] file a copy of a formally adopted budget when required or its failure to comply
             49      substantially [comply] with the [annual] financial reporting or independent auditing requirements
             50      required under this chapter[; provided, that upon].
             51          (2) Upon the city's compliance with the requirement, the state auditor shall distribute the
             52      money [shall be distributed] to [such] the city.
             53          Section 2. Section 10-6-105 is amended to read:
             54           10-6-105. Fiscal period -- Annual or biennial.
             55          [The fiscal year of all cities] (1) Except as provided in Subsection (2), the fiscal period for
             56      each city shall [begin] be an annual period beginning July 1 of each year and [shall end] ending
             57      June 30 of the following year.
             58          (2) (a) Notwithstanding Subsection (1), the legislative body of a city may, by ordinance,


             59      adopt for the city a fiscal period that is a biennial period beginning July 1 and ending June 30 of
             60      the second following calendar year.
             61          (b) Each city adopting an ordinance under Subsection (2)(a) shall separately specify in its
             62      budget the amount of ad valorem property tax it intends to levy and collect during both the first
             63      half and the second half of the budget period.
             64          Section 3. Section 10-6-106 is amended to read:
             65           10-6-106. Definitions.
             66          As used in this chapter:
             67          [(7)] (1) "Account group" is defined by generally accepted accounting principles as
             68      reflected in the Uniform Accounting Manual for Utah Cities.
             69          [(15)] (2) "Appropriation" means an allocation of money by the governing body for a
             70      specific purpose.
             71          [(10)] (3) (a) "Budget" means a plan of financial operations for a fiscal [year] period which
             72      embodies estimates of proposed expenditures for given purposes and the proposed means of
             73      financing them.
             74          (b) "Budget" may refer to the budget of a particular fund for which a budget is required
             75      by law or it may refer collectively to the budgets for all such funds.
             76          [(12)] (4) "Budgetary fund" means a fund for which [an annual] a budget is required.
             77          [(11)] (5) "Budget officer" means the city auditor in cities of the first and second class, the
             78      mayor or some person appointed by the mayor with the approval of the city council in cities of the
             79      third class, the mayor in the council-mayor optional form of government, or the person designated
             80      by the charter in charter cities.
             81          [(2)] (6) "Budget [year] period" means the fiscal [year] period for which a budget is
             82      prepared.
             83          [(17)] (7) "Check" means an order in a specific amount drawn upon a depository by an
             84      authorized officer of a city.
             85          [(3)] (8) "Current [year] period" means the fiscal [year] period in which a budget is
             86      prepared and adopted, i.e., the fiscal [year] period next preceding the budget [year] period.
             87          [(13)] (9) "Department" means any functional unit within a fund [which] that carries on
             88      a specific activity, such as a fire or police department within a General Fund.
             89          [(16)] (10) "Encumbrance system" means a method of budgetary control in which part of


             90      an appropriation is reserved to cover a specific expenditure by charging obligations, such as
             91      purchase orders, contracts, or salary commitments to an appropriation account at their time of
             92      origin. Such obligations cease to be encumbrances when paid or when the actual liability is
             93      entered on the city's books of account.
             94          [(14)] (11) "Estimated revenue" means the amount of revenue estimated to be received
             95      from all sources during the budget [year] period in each fund for which a budget is being prepared.
             96          [(20)] (12) "Financial officer" means the mayor in the council-mayor optional form of
             97      government or the city official as authorized by Section 10-6-158 .
             98          [(1)] (13) "Fiscal [year] period" means the annual or biennial period for accounting for
             99      fiscal operations in each city.
             100          [(5)] (14) "Fund" is as defined by generally accepted accounting principles as reflected in
             101      the Uniform Accounting Manual for Utah Cities.
             102          [(8)] (15) "Fund balance," "retained earnings," and "deficit" have the meanings commonly
             103      accorded such terms under generally accepted accounting principles as reflected in the Uniform
             104      Accounting Manual for Utah Cities.
             105          [(19)] (16) "Governing body" means a city council, or city commission, as [appropriate;
             106      however,] the case may be, but the authority to make any appointment to any position created by
             107      this chapter is vested in the mayor in the council-mayor optional form of government.
             108          [(9)] (17) "Interfund loan" means a loan of cash from one fund to another, subject to future
             109      repayment[; it] and does not constitute an expenditure or a use of retained earnings or fund balance
             110      of the lending fund or revenue to the borrowing fund.
             111          [(4)] (18) "Last completed fiscal [year] period" means the [year] fiscal period next
             112      preceding the current [year] period.
             113          [(21)] (19) "Public funds" means any money or payment collected or received by an officer
             114      or employee of the city acting in an official capacity and includes money or payment to the officer
             115      or employee for services or goods provided by the city, or the officer or employee while acting
             116      within the scope of employment or duty. Public funds do not include money or payments collected
             117      or received by an officer or employee of a city for charitable purposes if the mayor or city council
             118      has consented to the officer's or employee's participation in soliciting contributions for a charity.
             119          [(6)] (20) "Special fund" means any fund other than the General Fund.
             120          [(18)] (21) "Warrant" means an order drawn upon the city treasurer, in the absence of


             121      sufficient money in the city's depository, by an authorized officer of a city for the purpose of
             122      paying a specified amount out of the city treasury to the person named or to the bearer as money
             123      becomes available.
             124          Section 4. Section 10-6-109 is amended to read:
             125           10-6-109. Budget required for certain funds -- Capital projects fund budget.
             126          (1) The budget officer shall prepare for each budget [year] period a budget for each of the
             127      following funds:
             128          (a) the general fund, including the class "C" and collector road funds;
             129          (b) special revenue funds;
             130          (c) debt service funds; and
             131          (d) capital improvement funds.
             132          (2) Major capital improvements financed by general obligation bonds, capital grants, or
             133      interfund transfers, shall use a capital projects fund budget. The term of the budget shall coincide
             134      with the term of the individual project or projects. To the extent appropriate, the requirements for
             135      preparation, adoption, and execution of the budgets of the funds enumerated in Subsection (1)
             136      above, as set forth in this chapter, shall apply to budgets of capital projects funds.
             137          Section 5. Section 10-6-110 is amended to read:
             138           10-6-110. Budget -- Contents -- Total of revenues to equal expenditures.
             139          (1) The budget for each fund set forth in Subsection 10-6-109 (1) shall provide a complete
             140      financial plan for the budget [year] period. Each budget shall specify in tabular form:
             141          (a) estimates of all anticipated revenues, classified by the account titles prescribed in the
             142      Uniform Accounting Manual for Utah Cities; and
             143          (b) all appropriations for expenditures, classified by the account titles prescribed in the
             144      Uniform Accounting Manual for Utah Cities.
             145          (2) The total of the anticipated revenues shall equal the total of appropriated expenditures.
             146          Section 6. Section 10-6-111 is amended to read:
             147           10-6-111. Tentative budget to be prepared -- Contents -- Estimate of expenditures
             148      -- Budget message -- Review by governing body.
             149          (1) On or before the first regularly scheduled meeting of the governing body in the last
             150      May of [each year] the current period, the budget officer shall prepare for the ensuing [year] fiscal
             151      period, on forms provided by the state auditor, and file with the governing body, a tentative budget


             152      for each fund for which a budget is required. The tentative budget of each fund shall set forth in
             153      tabular form the following:
             154          (a) Actual revenues and expenditures in the last completed fiscal [year] period.
             155          (b) Budget estimates for the current fiscal [year] period.
             156          (c) Actual revenues and expenditures for a period of six to [nine] 21 months, as
             157      appropriate, of the current fiscal [year] period.
             158          (d) Estimated total revenues and expenditures for the current fiscal [year] period.
             159          (e) The budget officer's estimates of revenues and expenditures for the budget [year]
             160      period, computed in the following manner:
             161          (i) The budget officer shall estimate, on the basis of demonstrated need, the expenditures
             162      for the budget [year] period after a review of the budget requests and estimates of the department
             163      heads. Each department head shall be heard by the budget officer prior to making of the final
             164      estimates, but the officer may revise any department's estimate as the officer [deems] considers
             165      advisable for the purpose of presenting the budget to the governing body.
             166          (ii) The budget officer shall estimate the amount of revenue available to serve the needs
             167      of each fund, estimate the portion to be derived from all sources other than general property taxes,
             168      and estimate the portion that must be derived from general property taxes. From the latter estimate
             169      the officer shall compute and disclose in the budget the lowest rate of property tax levy that will
             170      raise the required amount of revenue, calculating the levy upon the latest taxable value.
             171          (f) If the governing body elects, actual performance experience to the extent established
             172      by Section 10-6-154 and available in work units, unit costs, man hours, or man years for each
             173      budgeted fund on an actual basis for the last completed fiscal [year] period, and estimated for the
             174      current fiscal [year] period and for the ensuing budget [year] period.
             175          (2) (a) Each tentative budget, when filed by the budget officer with the governing body,
             176      shall contain the estimates of expenditures submitted by department heads, together with specific
             177      work programs and such other supporting data as this chapter requires or the governing body may
             178      request. First and second-class cities shall, and third-class cities may, submit a supplementary
             179      estimate of all capital projects which each department head believes should be undertaken within
             180      the next three succeeding years.
             181          (b) Each tentative budget submitted by the budget officer to the governing body shall be
             182      accompanied by a budget message, which shall explain the budget, contain an outline of the


             183      proposed financial policies of the city for the budget [year] period, and shall describe the important
             184      features of the budgetary plan. It shall set forth the reasons for salient changes from the previous
             185      [year] fiscal period in appropriation and revenue items and shall explain any major changes in
             186      financial policy.
             187          (3) Each tentative budget shall be reviewed, considered, and tentatively adopted by the
             188      governing body in any regular meeting or special meeting called for the purpose and may be
             189      amended or revised in such manner as is [deemed] considered advisable prior to public hearings,
             190      except that no appropriation required for debt retirement and interest or reduction of any existing
             191      deficits pursuant to Section 10-6-117 , or otherwise required by law or ordinance, may be reduced
             192      below the minimums so required.
             193          (4) In the event the municipality is acting pursuant to Section 10-2-120 , the tentative
             194      budget shall be submitted to the governing body 60 days prior to the intended filing of the articles
             195      of incorporation and shall cover each fund for which a budget is required from the date of
             196      incorporation to the end of the fiscal year. The governing body shall substantially comply with all
             197      other provisions of this act, and the budget shall be passed upon incorporation.
             198          Section 7. Section 10-6-116 is amended to read:
             199           10-6-116. Accumulated fund balances -- Limitations -- Excess balances --
             200      Unanticipated excess of revenues -- Reserves for capital improvements.
             201          (1) Cities are permitted to accumulate retained earnings or fund balances, as appropriate,
             202      in any fund. With respect to the General Fund only, any accumulated fund balance is restricted
             203      to the following purposes:
             204          (a) to provide working capital to finance expenditures from the beginning of the budget
             205      [year] period until general property taxes, sales taxes, or other applicable revenues are collected,
             206      thereby reducing the amount which the city must borrow during the period, but this Subsection
             207      (1)(a) does not permit the appropriation of any fund balance for budgeting purposes except as
             208      provided in Subsection (4);
             209          (b) to provide a resource to meet emergency expenditures under Section 10-6-129 ; and
             210          (c) to cover a pending year-end excess of expenditures over revenues from an unavoidable
             211      shortfall in revenues. This provision does not permit the appropriation of any fund balance to
             212      avoid an operating deficit during any budget [year] period except as provided under Subsection
             213      (4), or for emergency purposes under Section 10-6-129 .


             214          (2) The accumulation of a fund balance in the General Fund shall not exceed 18% of the
             215      total estimated revenue of the General Fund.
             216          (3) If the fund balance at the close of any fiscal [year] period exceeds the amount permitted
             217      under Subsection (2), the excess shall be appropriated in the manner provided in Section 10-6-117 .
             218          (4) Any fund balance in excess of 5% of the total revenues of the General Fund may be
             219      utilized for budget purposes.
             220          (5) (a) Within a capital improvements fund the governing body may, in any budget [year]
             221      period, appropriate from estimated revenue or fund balance to a reserve for capital improvements
             222      for the purpose of financing future specific capital improvements, under a formal long-range
             223      capital plan adopted by the governing body.
             224          (b) The reserves may accumulate from [year] fiscal period to [year] fiscal period until the
             225      accumulated total is sufficient to permit economical expenditure for the specified purposes.
             226          (c) Disbursements from these reserves shall be made only by transfer to a revenue or
             227      transfer account within the capital improvements fund, under a budget appropriation in a budget
             228      for the fund adopted in the manner provided by this chapter.
             229          (d) Expenditures from the above appropriation budget accounts shall conform to all
             230      requirements of this chapter relating to execution and control of budgets.
             231          Section 8. Section 10-6-117 is amended to read:
             232           10-6-117. Appropriations not to exceed estimated expendable revenue --
             233      Determination of revenue -- Appropriations for existing deficits.
             234          (1) The governing body of any city [shall] may not make any appropriation in the final
             235      budget of any fund in excess of the estimated expendable revenue for the budget [year] period of
             236      [such] the fund.
             237          (2) In determining the estimated expendable revenue of the general fund for the budget
             238      [year] period, there shall be included therein as an appropriation from the fund balance that portion
             239      of the fund balance at the close of the last completed fiscal [year] period, not previously included
             240      in the budget of the current [year] period, that exceeds the amount permitted in Section 10-6-116 .
             241          (3) There shall be included as an item of appropriation in each fund for any budget [year]
             242      period any existing deficit as of the close of the last completed fiscal [year] period, not previously
             243      included in the budget of the current [year] period, to the extent of at least [five percent] 5% of the
             244      total revenue of [such] the fund in its last completed fiscal [year] period. If the total amount of the


             245      deficit is less than [five percent] 5% of the total revenue in the last completed fiscal [year] period,
             246      the entire amount of [such] the deficit shall be included.
             247          Section 9. Section 10-6-118 is amended to read:
             248           10-6-118. Adoption of final budget -- Certification and filing.
             249          Before the last June 22 of each fiscal [year] period, or [August 17], in the case of a property
             250      tax increase under Sections 59-2-919 through 59-2-923 , before August 17 of the year for which
             251      a property tax increase is proposed, the governing body shall by resolution or ordinance adopt a
             252      budget for the ensuing fiscal [year] period for each fund for which a budget is required under this
             253      chapter. A copy of the final budget for each fund shall be certified by the budget officer and filed
             254      with the state auditor within 30 days after adoption.
             255          Section 10. Section 10-6-119 is amended to read:
             256           10-6-119. Budgets in effect for budget year -- Amendment -- Filing for public
             257      inspection.
             258          Upon final adoption, the budgets shall be in effect for the budget [year] period, subject to
             259      later amendment. A certified copy of the adopted budgets shall be filed in the office of the city
             260      auditor or city recorder and shall be available to the public during regular business hours.
             261          Section 11. Section 10-6-121 is amended to read:
             262           10-6-121. Departmental expenditures -- Encumbrances -- Purchase order.
             263          (1) The budget officer shall require all expenditures by any department to conform with
             264      the departmental budget.
             265          (2) No appropriation may be encumbered and no expenditure may be made against any
             266      departmental appropriation unless there is sufficient unencumbered balance in the department's
             267      appropriation, except in cases of emergency as provided by this chapter.
             268          (3) All encumbrances reported as outstanding as of the fiscal [year] period end shall be
             269      supported by a purchase order issued on or before the last day of the fiscal [year] period and
             270      approved by the mayor in the council-mayor optional form of government or the governing body
             271      or its delegate in other cities, as provided under this chapter.
             272          Section 12. Section 10-6-124 is amended to read:
             273           10-6-124. Transfer of appropriation balance between accounts -- Excess expenditure
             274      within departments.
             275          With the consent of the budget officer, or [such] the approval in charter cities as required


             276      by charter, the head of any department may transfer any unencumbered or unexpended
             277      appropriation balance or any portion thereof from one expenditure account to another within the
             278      department during the budget [year] period, or an excess expenditure of one or more line items
             279      may be permitted by any department head with the consent of the budget officer, or his equivalent
             280      in charter cities, provided the total of all excess expenditures or encumbrances do not exceed total
             281      unused appropriations within the department at the close of the budget [year] period.
             282          Section 13. Section 10-6-127 is amended to read:
             283           10-6-127. Review of individual fund budgets -- Hearing.
             284          Upon the written request of one of the members of the governing body, or upon its own
             285      motion setting forth the reason therefor, the governing body may, at any time during the budget
             286      [year] period, review the individual budgets of the funds set forth in Section 10-6-109 , for the
             287      purpose of determining if the total of any of them should be increased. If the governing body
             288      decides that the budget total of one or more of these funds should be increased, it shall follow the
             289      procedures set forth in Sections 10-6-113 and 10-6-114 for holding a public hearing.
             290          Section 14. Section 10-6-128 is amended to read:
             291           10-6-128. Amendment and increase of individual fund budgets.
             292          After the conclusion of the hearing, the governing body, by resolution or ordinance, may
             293      amend the budgets of the funds proposed to be increased, so as to make all or part of the increases
             294      therein, both estimated revenues and appropriations, which were the proper subject of
             295      consideration at the hearing. Final amendments in the current [year] period to the budgets of any
             296      of the funds set forth in Section 10-6-109 shall be adopted by the governing body on or before the
             297      last day of the fiscal [year] period.
             298          Section 15. Section 10-6-130 is amended to read:
             299           10-6-130. Lapse of appropriations -- Exceptions.
             300          All unexpended or unencumbered appropriations except capital projects fund
             301      appropriations shall lapse at the end of the budget [year] period.
             302          Section 16. Section 10-6-135 is amended to read:
             303           10-6-135. Operating and capital budgets.
             304          (1) On or before the time the governing body adopts budgets for the funds set forth in
             305      Section 10-6-109 , it shall adopt for the ensuing [year] fiscal period an "operating and capital
             306      budget" for each enterprise fund and shall adopt [such] the type of budget for other special funds


             307      as required by the Uniform Accounting Manual for Utah Cities.
             308          (2) An "operating and capital budget," for purposes of this section, means a plan of
             309      financial operation for an enterprise or other required special fund, embodying estimates of
             310      operating resources and expenses and other outlays for a fiscal [year] period. Except as otherwise
             311      expressly provided, the reference to "budget" or "budgets" and the procedures and controls relating
             312      to them in other sections of this chapter do not apply or refer to the "operating and capital budgets"
             313      provided for in this section.
             314          (3) "Operating and capital budgets" shall be adopted and administered in the following
             315      manner:
             316          (a) On or before the first regularly scheduled meeting of the governing body in the last
             317      May of [each year] the current period, the budget officer shall prepare for the ensuing fiscal [year]
             318      period and file with the governing body a tentative operating and capital budget for each enterprise
             319      fund and for other required special funds, together with specific work programs as submitted by
             320      the department head and any other supporting data required by the governing body.
             321          (b) First and second-class cities shall, and third-class cities may, submit a supplementary
             322      estimate of all capital projects which the department head believes should be undertaken within
             323      the three next succeeding fiscal years.
             324          (c) The budget officer shall prepare estimates in cooperation with the appropriate
             325      department heads. Each department head shall be heard by the budget officer prior to making final
             326      estimates, but thereafter the officer may revise any department's estimate for the purpose of
             327      presenting the budget to the governing body.
             328          (d) If within any enterprise fund, allocations or transfers which cannot be defined as a
             329      reasonable allocation of costs between funds are included in a tentative budget, a written notice
             330      as to date, time, place, and purpose of [such] the hearing is to be mailed to utility fund customers
             331      at least seven days prior to the hearing.
             332          (4) The tentative budget or budgets shall be reviewed and considered by the governing
             333      body at any regular meeting or special meeting called for that purpose. The governing body may
             334      make changes in the tentative budgets.
             335          (5) Budgets for enterprise or other required special funds shall comply with the public
             336      hearing requirements established in Sections 10-6-113 and 10-6-114 .
             337          (6) Before the last June 22 of each fiscal [year] period, or [August 17], in the case of a


             338      property tax increase under Sections 59-2-919 through 59-2-923 , before August 17 of the year for
             339      which a property tax increase is proposed, the governing body shall adopt an operating and capital
             340      budget for each applicable fund for the ensuing fiscal [year] period. A copy of the budget as
             341      finally adopted for each fund shall be:
             342          (a) certified by the budget officer;
             343          (b) filed by the officer in the office of the city auditor or city recorder;
             344          (c) available to the public during regular business hours; and
             345          (d) filed with the state auditor within 30 days after adoption.
             346          (7) Upon final adoption, the operating and capital budget shall be in effect for the budget
             347      [year] period, subject to later amendment. During the budget [year] period the governing body
             348      may, in any regular meeting or special meeting called for that purpose, review any one or more of
             349      the operating and capital budgets for the purpose of determining if the total of any of them should
             350      be increased. In the event the governing body decides that the budget total of one or more of these
             351      funds should be increased, the procedures set forth in Section 10-6-136 shall be followed.
             352          (8) Expenditures from operating and capital budgets shall conform to the requirements
             353      relating to budgets specified in Sections 10-6-121 , 10-6-122 , 10-6-123 , 10-6-124 , 10-6-125 , and
             354      10-6-126 .
             355          Section 17. Section 10-6-150 is amended to read:
             356           10-6-150. Annual financial reports -- Independent audit reports.
             357          Within 180 days after the close of each fiscal [year] period, the city recorder or other
             358      delegated person shall present to the governing body an annual financial report prepared in
             359      conformity with generally accepted accounting principles, as prescribed in the Uniform
             360      Accounting Manual for Utah Cities. This requirement may be satisfied by presentation of the audit
             361      report furnished by the independent auditor, if the financial statements included are appropriately
             362      prepared and reviewed with the governing body. Notwithstanding the acceptability of the audit
             363      report furnished by the independent auditor in substitution for financial statements prepared by an
             364      officer of the city, the governing body has the responsibility for those financial statements. The
             365      independent auditor has the responsibility of reporting whether the governing body's financial
             366      statements are prepared in conformity with generally accepted accounting principles. Copies of
             367      the [annual] financial report or the audit report furnished by the independent auditor shall be filed
             368      with the state auditor and shall be filed as a public document in the office of the city recorder.


             369          Section 18. Section 17-36-3 is amended to read:
             370           17-36-3. Definitions.
             371          As used in this chapter:
             372          (1) "Accrual basis of accounting" means a method where revenues are recorded when
             373      earned and expenditures recorded when they become liabilities notwithstanding that the receipt
             374      of the revenue or payment of the expenditure may take place in another accounting period.
             375          (2) "Appropriation" means an allocation of money for a specific purpose.
             376          (3) (a) "Budget" means a plan for financial operations for a fiscal [year] period, embodying
             377      estimates for proposed expenditures for given purposes and the means of financing the
             378      expenditures.
             379          (b) "Budget" may refer to the budget of a fund for which a budget is required by law, or
             380      collectively to the budgets for all those funds.
             381          (4) "Budgetary fund" means a fund for which [an annual] a budget is required, such as
             382      those described in Section 17-36-8 .
             383          (5) "Budget officer" means the county auditor as provided in Section 17-19-19 .
             384          (6) "Budget [year] period" means the fiscal [year] period for which a budget is prepared.
             385          (7) "Check" means an order in a specific amount drawn upon the depositary by any
             386      authorized officer in accordance with Section 17-19-3 or 17-24-1 .
             387          (8) "Countywide service" means a service provided in both incorporated and
             388      unincorporated areas of a county.
             389          (9) "Current [year]" period means the fiscal [year] period in which a budget is prepared
             390      and adopted.
             391          (10) "Department" means any functional unit within a fund which carries on a specific
             392      activity.
             393          (11) "Encumbrance system" means a method of budgetary control where part of an
             394      appropriation is reserved to cover a specific expenditure by charging obligations, such as purchase
             395      orders, contracts, or salary commitments to an appropriation account. An expenditure ceases to be
             396      an encumbrance when paid or when the actual liability is entered in the books of account.
             397          (12) "Estimated revenue" means any revenue estimated to be received during the budget
             398      [year] period in any fund for which a budget is prepared.
             399          (13) "Fiscal [year] period" means the annual or biennial period for recording county fiscal


             400      operations [beginning January 1 and ending December 31 of each year].
             401          (14) "Fund" means an independent fiscal and accounting entity comprised of a sum of
             402      money or other resources segregated for a specific purpose or objective.
             403          (15) "Fund balance" means the excess of the assets over liabilities, reserves, and
             404      contributions, as reflected by its books of account.
             405          (16) "Fund deficit" means the excess of liabilities, reserves, and contributions over its
             406      assets, as reflected by its books of account.
             407          (17) "General Fund" means the fund used to account for all receipts, disbursements, assets,
             408      liabilities, reserves, fund balances, revenues, and expenditures not required to be accounted for in
             409      other funds.
             410          (18) "Interfund loan" means a loan of cash from one fund to another, subject to future
             411      repayment; but it does not constitute an expenditure or a use of retained earnings, fund balance,
             412      or unappropriated surplus of the lending fund.
             413          (19) "Last completed fiscal [year] period" means the [year] fiscal period next preceding
             414      the current [year] period.
             415          (20) "Modified accrual basis of accounting" means a method under which expenditures
             416      other than accrued interest on general long-term debt are recorded at the time liabilities are
             417      incurred and revenues are recorded when they become measurable and available to finance
             418      expenditures of the current period.
             419          (21) "Municipal capital project" means the acquisition, construction, or improvement of
             420      capital assets that facilitate providing municipal service.
             421          (22) "Municipal service" means a service not provided on a countywide basis and not
             422      accounted for in an enterprise fund, and includes police patrol, fire protection, culinary or irrigation
             423      water retail service, water conservation, local parks, sewers, sewage treatment and disposal,
             424      cemeteries, garbage and refuse collection, street lighting, airports, planning and zoning, local
             425      streets and roads, curb, gutter, and sidewalk maintenance, and ambulance service.
             426          (23) "Retained earnings" means that part of the net earnings retained by an enterprise or
             427      internal service fund which is not segregated or reserved for any specific purpose.
             428          (24) "Special fund" means any fund other than the General Fund, such as those described
             429      in Section 17-36-6 .
             430          (25) "Unappropriated surplus" means that part of a fund which is not appropriated for an


             431      ensuing budget [year] period.
             432          (26) "Warrant" means an order in a specific amount drawn upon the treasurer by the
             433      auditor.
             434          Section 19. Section 17-36-3.5 is enacted to read:
             435          17-36-3.5. Fiscal period -- Annual or biennial.
             436          (1) Except as provided in Subsection (2), the fiscal period for each county shall be an
             437      annual period beginning on January 1 of each year and ending December 31 of the same calendar
             438      year.
             439          (2) (a) Notwithstanding Subsection (1), the legislative body of a county may, by ordinance,
             440      adopt for the county a fiscal period that is a biennial period beginning January 1 and ending
             441      December 31 of the following calendar year.
             442          (b) Each county adopting an ordinance under Subsection (2)(a) shall separately specify in
             443      its budget the amount of ad valorem property tax it intends to levy and collect during both the first
             444      half and the second half of the budget period.
             445          Section 20. Section 17-36-8 is amended to read:
             446           17-36-8. Preparation of budgets.
             447          The budget officer of each county shall prepare each budget [year] period, on forms
             448      provided pursuant to Section 17-36-4 , a budget for each of the following funds which are included
             449      in its system of accounts:
             450          (1) general fund;
             451          (2) special revenue funds;
             452          (3) debt service funds;
             453          (4) capital project funds; and
             454          (5) any other fund or funds for which a budget is required by the uniform system of
             455      budgeting, accounting, and reporting.
             456          Section 21. Section 17-36-9 is amended to read:
             457           17-36-9. Budget -- Financial plan -- Contents -- Municipal services and capital
             458      projects funds.
             459          (1) (a) The budget for each fund shall provide a complete financial plan for the budget
             460      [year] period and shall contain in tabular form classified by the account titles as required by the
             461      uniform system of budgeting, accounting, and reporting:


             462          (i) estimates of all anticipated revenues;
             463          (ii) all appropriations for expenditures; and
             464          (iii) any additional data required by Section 17-36-10 or by the uniform system of
             465      budgeting, accounting, and reporting.
             466          (b) The total of appropriated expenditures shall be equal to the total of anticipated
             467      revenues.
             468          (2) (a) Each first-, second-, and third-class county that provides municipal-type services
             469      under Section 17-34-1 shall:
             470          (i) establish a special revenue fund, "Municipal Services Fund," and a capital projects
             471      fund, "Municipal Capital Projects Fund," or establish a special district to provide municipal
             472      services; and
             473          (ii) budget appropriations for municipal services and municipal capital projects from these
             474      funds.
             475          (b) The Municipal Services Fund is subject to the same budgetary requirements as the
             476      county's general fund.
             477          (c) (i) Except as provided in Subsection (2)(c)(ii), the county may deposit revenue derived
             478      from any taxes otherwise authorized by law, income derived from the investment of money
             479      contained within the municipal services fund and the municipal capital projects fund, the
             480      appropriate portion of federal money, and fees collected into a municipal services fund and a
             481      municipal capital projects fund.
             482          (ii) The county may not deposit revenue derived from a fee, tax, or other source based
             483      upon a countywide assessment or from a countywide service or function into a municipal services
             484      fund or a municipal capital projects fund.
             485          (d) The maximum accumulated unappropriated surplus in the municipal services fund, as
             486      determined prior to adoption of the tentative budget, may not exceed an amount equal to the total
             487      estimated revenues of the current fiscal [year] period.
             488          Section 22. Section 17-36-10 is amended to read:
             489           17-36-10. Preparation of tentative budget.
             490          (1) On or before the first day of the next to last month of every fiscal [year] period, the
             491      budget officer shall prepare for the next budget [year] period and file with the governing body a
             492      tentative budget for each fund for which a budget is required.


             493          (2) The tentative budget shall set forth in tabular form:
             494          (a) actual revenues and expenditures in the last completed fiscal [year] period;
             495          (b) estimated total revenues and expenditures for the current fiscal [year] period;
             496          (c) the estimated available revenues and expenditures for the ensuing budget [year] period
             497      computed by determining:
             498          (i) the estimated expenditure for each fund after review of each departmental budget
             499      request;
             500          (ii) (A) the total revenue requirements of the fund;
             501          (B) the part of the total revenue that will be derived from revenue sources other than
             502      property tax; and
             503          (C) the part of the total revenue that must be derived from property taxes;
             504          (d) if required by the governing body, actual performance experience to the extent
             505      available in work units, unit costs, man hours, and man years for each budgeted fund that includes
             506      an appropriation for salaries or wages for the last completed fiscal [year] period and the first eight
             507      months of the current fiscal [year] period if the county is on an annual fiscal period, or the first 16
             508      months of the current fiscal period if the county is on a biennial fiscal period, together with the
             509      total estimated performance data of like character for the current fiscal [year] period and for the
             510      ensuing budget [year] period.
             511          (3) The budget officer may recommend modification of any departmental budget request
             512      under Subsection (2)(c)(i) before it is filed with the governing body, if each department head has
             513      been given an opportunity to be heard concerning [such] the modification.
             514          (4) Each tentative budget shall contain the estimates of expenditures submitted by any
             515      department together with specific work programs and other supportive data as the governing body
             516      requests. The tentative budget shall be accompanied by a supplementary estimate of all capital
             517      projects or planned capital projects within the budget [year] period and within the next three
             518      succeeding years.
             519          (5) (a) Each tentative budget submitted in a county with a population in excess of 25,000
             520      determined pursuant to Section 17-36-4 shall be accompanied by a budget message in explanation
             521      of the budget.
             522          (b) The budget message shall contain an outline of the proposed financial policies of the
             523      county for the budget [year] period and describe the important features of the budgetary plan. It


             524      shall also state the reasons for changes from the previous [year] fiscal period in appropriation and
             525      revenue items and explain any major changes in financial policy.
             526          (c) A budget message for counties with a population of less than 25,000 is recommended
             527      but not incumbent upon the budget officer.
             528          (6) The tentative budget shall be reviewed, considered, and tentatively adopted by the
             529      governing body in a regular or special meeting called for that purpose. It may thereafter be
             530      amended or revised by the governing body prior to public hearings thereon, except that no
             531      appropriation required for debt retirement and interest or reduction, pursuant to Section 17-36-17 ,
             532      of any deficits which exist may be reduced below the required minimum.
             533          Section 23. Section 17-36-15 is amended to read:
             534           17-36-15. Adoption of budget.
             535          On or before the 15th day of the last month of each fiscal [year] period, the governing body
             536      by resolution shall adopt the budget which, subject to further amendment, shall thereafter be in
             537      effect for the next fiscal [year] period. A copy of the final budget, and of any subsequent
             538      amendment thereof, shall be certified by the budget officer and filed with the state auditor not later
             539      than [thirty] 30 days after its adoption. A copy, similarly certified, shall be filed in the office of the
             540      budget officer for inspection by the public during business hours.
             541          Section 24. Section 17-36-16 is amended to read:
             542           17-36-16. Retained earnings -- Accumulation -- Restrictions -- Disbursements.
             543          (1) A county may accumulate retained earnings in any enterprise or internal service fund
             544      or a fund balance in any other fund; but with respect to the General Fund, its use shall be restricted
             545      to the following purposes:
             546          (a) to provide cash to finance expenditures from the beginning of the budget [year] period
             547      until general property taxes, sales taxes, or other revenues are collected;
             548          (b) to provide a fund or reserve to meet emergency expenditures; and
             549          (c) to cover unanticipated deficits for future years.
             550          (2) The maximum accumulated unappropriated surplus in the General Fund, as determined
             551      prior to adoption of the tentative budget, may not exceed an amount equal to the estimated
             552      revenues from property taxes of the current fiscal [year] period, except that in counties with a
             553      taxable value of $750,000,000 or more and a population of 100,000 or more, the accumulated
             554      surplus shall be limited to 20% of the total revenues of the General Fund for the current fiscal


             555      [year] period. Any surplus balance in excess of the above computed maximum shall be included
             556      in the estimated revenues of the General Fund budget for the next fiscal [year] period.
             557          (3) Any fund balance exceeding 5% of the total General Fund revenues may be used for
             558      budgetary purposes.
             559          (4) (a) A county may appropriate funds from estimated revenue in any budget [year] period
             560      to a reserve for capital improvements within any capital improvements fund which has been duly
             561      established by ordinance or resolution.
             562          (b) Money in the reserves shall be allowed to accumulate from [year] fiscal period to [year]
             563      fiscal period until the accumulated total is sufficient to permit economical expenditure for the
             564      specified purposes.
             565          (c) Disbursements from the reserves shall be made only by transfer to a revenue account
             566      within a capital improvements fund pursuant to an appropriation for the fund.
             567          (d) Expenditures from the capital improvement budget accounts shall conform to all
             568      requirements of this act as it relates to the execution and control of budgets.
             569          Section 25. Section 17-36-17 is amended to read:
             570           17-36-17. Appropriations in final budget -- Limitations.
             571          (1) The governing body of a county shall not make any appropriation in the final budget
             572      of any fund in excess of the estimated expendable revenue of [such] the fund for the budget [year]
             573      period.
             574          (2) There shall be included as an item of appropriation in the budget of each fund for any
             575      fiscal [year] period any existing deficit as of the close of the last completed fiscal [year] period to
             576      the extent of at least 5% of the total revenue of [such] the fund in the last completed fiscal [year]
             577      period or if the deficit is less than 5% of the total revenue, an amount equal to the deficit.
             578          Section 26. Section 17-36-22 is amended to read:
             579           17-36-22. Transfer of unexpended appropriation balance by department.
             580          With the consent of the budget officer, any department may transfer any unencumbered or
             581      unexpended appropriation balance or any part from one expenditure account to another within the
             582      department during the budget year, or an excess expenditure of one or more line items may be
             583      permitted; provided, that the total of all excess expenditures or encumbrances does not exceed the
             584      total unused appropriation within the department at the close of the budget [year] period.
             585          Section 27. Section 17-36-28 is amended to read:


             586           17-36-28. Lapse of appropriations.
             587          All appropriations shall lapse following the close of the budget [year] period to the extent
             588      that they are unexpended or encumbered.
             589          Section 28. Section 17-36-32 is amended to read:
             590           17-36-32. Operating and capital budget -- Expenditures.
             591          Before or at the time the governing body adopts budgets for the budgetary funds specified
             592      in Section 17-36-8 , it shall adopt an "operating and capital budget" for the next fiscal [year] period
             593      for each enterprise fund and for any other special nonbudgetary fund for which operating and
             594      capital budgets are prescribed by the uniform system of budgeting, accounting, and reporting.
             595          "Operating and capital budget," for purposes of this section, means a plan of financial
             596      operation for an enterprise or other special fund embodying estimates of operating and
             597      nonoperating resources and expenses and other outlays for a fiscal [year] period. Except as
             598      otherwise expressly provided, "budget" or "budgets" and the procedures and controls relating
             599      thereto in other sections of this act are not applicable to the "operating and capital budgets"
             600      provided in this section.
             601          Operating and capital budgets shall be adopted and administered in the following manner:
             602          (1) On or before the first day of the [11th] next to last month of each fiscal [year] period,
             603      the budget officer shall prepare for the next fiscal [year] period on forms provided pursuant to
             604      Section 17-36-4 , and file with the governing body a tentative operating and capital budget for each
             605      enterprise fund and for any other special fund which requires an operating and capital budget.
             606          The tentative operating and capital budget shall be accompanied by a supplementary
             607      estimate of all capital projects or planned capital projects within the next fiscal [year] period and
             608      within the [three] next succeeding fiscal [years] period.
             609          The budget officer shall prepare all [such] the estimates after review and consultation, if
             610      requested, with the concerned department, but thereafter the budget officer has authority to revise
             611      any departmental estimate before it is filed with the governing body.
             612          (2) The tentative operating and capital budget shall be reviewed by the governing body at
             613      any regular or special meeting called for that purpose. It may make any changes it [deems]
             614      considers advisable. Prior to the close of the fiscal [year] period, it shall adopt an operating and
             615      capital budget for the next fiscal [year] period.
             616          (3) Upon final adoption, the operating and capital budget shall be in effect for the budget


             617      [year] period subject to amendment. A copy of the operating and capital budget for each fund shall
             618      be certified by the budget officer and made available to the public during business hours in the
             619      offices of the county auditor. A copy of the operating and capital budget shall be filed with the
             620      state auditor within 30 days after its adoption.
             621          The governing body may during the budget [year] period amend the operating and capital
             622      budget of an enterprise or other special fund by resolution. A copy of the operating and capital
             623      budget as amended shall be filed with the state auditor.
             624          (4) Any expenditure from an operating and capital budget shall conform to the
             625      requirements for budgets specified by Sections 17-36-20 , 17-36-22 , 17-36-23 , and 17-36-24 .
             626          Section 29. Section 17-36-37 is amended to read:
             627           17-36-37. Budget officer -- Annual financial statement -- Contents.
             628          The budget officer of each county, within 180 days after the close of each fiscal [year]
             629      period, except as provided by Section 17-36-38 , shall prepare and make available to the governing
             630      body [an annual] a financial report which shall contain a statement of revenues and expenditures
             631      and a comparison with the budget of the general fund, similar statements of all other funds for
             632      which budgets are required, and statements of revenues and expenditures or of income and
             633      expense, as the case may be, of all other operating funds of the county; a balance sheet of each
             634      fund and a combined balance sheet of all funds as of the close of the fiscal [year] period; or any
             635      other reports the governing body may require, including work performance data, tax levies, taxable
             636      values, details of bonded indebtedness, and historical facts of interest to the governing body and
             637      the public. Copies of the annual report shall be furnished to the state auditor and made a matter
             638      of public record in the office of the budget officer.
             639          Section 30. Section 17-36-38 is amended to read:
             640           17-36-38. Presentation of annual report by independent auditor.
             641          The [annual] report required by Section 17-36-37 may be satisfied by a county by the
             642      presentation of the report of the independent auditor on the results of operations for the [year]
             643      fiscal period and financial condition at the close of the [year] fiscal period if it is prepared in
             644      conformity with the uniform system of budgeting, accounting, and reporting.





Legislative Review Note
    as of 2-4-99 2:13 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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