Operating Budget 2025-2026

Principles of Sound Financial Management (cont.) 15. Investment practices should be in accordance with the Town’s Investment and Portfolio Policy. The Investment and Portfolio Policy should be reviewed by Town Council every two years. The Town Manager should forward to the Town Council a quarterly investment report. 16. The Town shall annually prepare an Annual Comprehensive Financial Report and should seek recognition from the GFOA by applying for and receiving the organization’s Certificate of Excellence in Financial Reporting. In addition, the Town should seek recognition by applying for and receiving the GFOA Distinguished Budget Presentation Award. 17. The Midtown Special Service District shall be operated as a Special Revenue Fund. The Midtown Special Service District Fund was created for the purpose of providing financing for a higher level of public services within the service district. This purpose includes the costs of construction and related debt service of a public parking garage, as well as services required to provide maintenance and operation of the garage. Within the Midtown Special Service District, beginning January 1, 2021, there is levied and imposed for each calendar year, in addition to the real estate tax levied by Town Code 22-200, an additional tax of $0.20 per hundred dollars of assessed valuation on all real estate and the improvements thereon not expressly exempt from taxation. All of the additional real estate tax from the Midtown Special Service District is dedicated to this fund. Furthermore, the Town will also earmark 85% of the meals and lodging taxes generated from entities located in the Service District to this fund. At a minimum, these revenues should be sufficient to fund the debt service of the public parking garage. 18. The Town operates four enterprise funds: Water and Sewer, Solid Waste and Recycling, Stormwater and Transit. Enterprise Funds should be self-sufficient. Solid Waste and Recycling and Stormwater Funds should include a reserve of at least three months expenditures for operations and maintenance. Transit should include a reserve of at least nine months expenditures for operations and maintenance. Enterprise Funds should be charged for indirect administrative costs performed by other Town departments. Revenue should be sufficient to fund operations, capital improvements, equipment replacement and department service. 19. To maintain the integrity of the Water and Sewer Fund the following goals should be achieved: a. Maintain a cash balance in the Water and Sewer Fund at a target of six months expenditures for operations and maintenance of the systems plus 3% of fixed assets for a renewal and replacement reserve. b. Maintain a ratio of Net Revenues (Revenues less Operations not including Depreciation) of at least 1.50x debt service requirements without considering new availability revenues. 20. User fees for all operations should be reviewed annually to ensure rates are market competitive and defray operating costs. In the case of Enterprise Funds and Internal Service Funds, fees should be reviewed annually to ensure that revenues generate sufficient funds to cover the total cost of services. 21. A five-year Capital Improvement Program should be prepared each year at least three months prior to the submission of the budget. Principles of Sound Financial Management

Adopted by Town Council: April 23, 1996 Revised by Town Council: July 14, 1998 Revised by Town Council: August 24, 2004 Revised by Town Council: November 23, 2010 Revised by Town Council: February 23, 2016 Revised by Town Council: September 24, 2019 Revised by Town Council: March 23, 2021

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