To see the actual budget documents, click here.
These are questions that we get asked quite often about the budget.
Question 1- What is the total operating budget for the City and the breakdown of the revenue the city receives to pay its cost to serve the residents?
In its 2010-11 fiscal year, which started November 1, the City will spend its $32.4 million operating budget out of a handful of municipal accounts. Governmental agencies are required to account for their financial transactions by using what the accounting world calls "Funds" which are really just separate pots of money for the city's various activities.
For the most part, the city pays the bills for its day-to-day operational functions out of one big pot of money called the General Fund (also commonly referred to as the Operating Fund). However, some activities, such as parks and recreation, are paid for out of separate Funds that are required by law or have been set up by city management.
The General Fund gets much of its money from a variety of sources. One of the largest sources is franchise fees derived from utility taxes.
Combined, these two sources accounted for 56.4 percent of the General Fund revenue in the 2010-11 fiscal year.
One of the smallest sources of revenue is property (also called “ad valorem”) taxes. The City generates 9.25% of its general revenues from property taxes.
The rest of the money comes from various licenses, permits, fines and charges for services.
Question 2- What is the timeline for the city budget process and what is the state involvement?
The City uses an all year approach to budgeting. The active budget assimilation is from May through September, however, the City is monitoring its revenues and expenditures monthly to ensure that any adjustments that need to be made are timely.
The City begins to compile figures for the upcoming fiscal year in May. The Departments spend time analyzing the data and compiling their request based upon the Board identified goals in June.
In July, the City analyzes the requests and compiles the data for the City Administrator. The City Administrator will begin meeting with each department to gain an understanding of their goals and objectives for the upcoming year and to begin negotiating with each department to craft the recommended budget.
In August, the recommended budget is presented to the Mayor and the Board of Alderman for their review.
In September the Finance Committee will hold hearings on the recommended budget and will ultimately make a recommendation to the entire Board for their consideration. The Board will hear the formal presentation on the budget in September and must ultimately adopt the budget before the end of the fiscal year (October 31).
More information can be found in the budget document which is available on our website.
Question 3- Is there one pot of money used to pay for all City operations, such as staff salaries and benefits, equipment, and construction projects?
Actually, there are several pots of money – which are referred to by the accounting term “Funds” – that the City uses to account for its operations.
Government agencies account for the money they spend on their various operations under the headings of Government-Type Activities, Business-Type Activities and Fiduciary Activities, though there are expenses that fall outside these three main categories.
The Government-Type Activities category includes what people generally think of as typical city expenses, such as Police and EMS protection; these activities get their money primarily from the taxes and fees the Raytown residents and business owners pay.
The city accounts for its Government-Type Activities with four types of Funds:
The Business-Type Activities category covers costs that are paid for primarily by customers or direct-end users. Two types of Funds cover these activities:
The city’s final accounting category is Fiduciary Activities, which covers funds that have been established to handle the income and expenses of non-governmental or quasi-governmental agencies.
In other words, through the Fiduciary Activities category, Raytown Serves essentially as the manager for organizations that exist outside of the city government, though these organizations usually have some tie to the city’s official interests.
Government agencies frequently take on this type of work to remove some of the administrative burden from these types of outside but allied organizations. This money is not legally considered to be part of the city’s assets. Rather, the city is acting as the custodian of these funds. Example includes the Jackson County Tax Collection Fund that the City uses to account for all of the Jackson County property taxes it collects on behalf of Jackson County. Another example would be the Transportation Development District on 350 highway that has contracted with the City to be its fiduciary.
Question 4- Are all departments of the City subsidized by the city’s General Fund? Or are there some city departments or city-provided services that get their entire budget from taxes or fees?
Fees collected help pay for city services. For most areas of the city government, the answers to these two questions are “yes” and “no,” respectively. The two exceptions to this rule are the city’s sewer treatment activities, which are completely paid for by the various fees-service fees, connection fees and so forth – the city collects, and the Parks and Recreation Department which is paid for by a separate levy, sales tax and users fees.
Otherwise, the money for each department’s yearly expenses comes from the city’s General Fund, which in turn gets much of its money from the taxes residents, consumers and businesses pay, including sales and property taxes.
Question 5- But what about the fees the City collects through such activities as issuing business licenses, building permits or temporary work permits?
License and permit revenue is part of the General Fund revenue.
For the 2010-11 fiscal year, total General Fund license and permit revenue came to $330,320, or 2.77 percent of the total General Fund revenue.
Question 6- Does the City ever collect money that it can only use for a single purpose?
Actually, most of the money the city receives carries such restrictions in one form or another. Many of these restrictions come from outside agencies. State and local laws decree that some revenue the city collects has to be used for specific activities that are designated by law.
Other restrictions come directly from funding sources, such as with federal or other grants; by contract, as with bond covenants and user fees; or for other legal reasons.
In all cases, though these restrictions are imposed on the city as a requirement for obtaining this money, most commonly when the City receives a grant from an external agency that specifies haw that money is to be spent.
For example, in its 2009-10 fiscal year, Raytown received $2,011,634 from various grants. Each grant carried a specific requirement mostly reimbursement based that limited the use from which the funds could be spent.
Question 7- Does the City receive money from the state and/or the federal government? If so, how much? And can the Board of Alderman raise additional money or new revenue by taxing residents?
First off, yes, the city does receive money from both the state and federal governments. Although most state grants ultimately come from the federal government in the form of grants authorized by the United States Congress.
The city gets some money directly from various agencies in the federal executive branch, such as the Department of Justice or the Department of Housing and Urban Development.
Other amounts come to the city via the state government, which acts as a “pass-through” agency: it receives grants from the federal government and divides it among local governments that apply from share of the money.
As for raising additional money or tapping new sources of revenue, the Missouri Revised Statues do not grant local municipalities the authority to establish new taxes on their own or to raise existing tax rates above the limits established by statute without a vote of the people.
However, the City does have a limited ability to charge fees for various activities based on rising costs of doing business.