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Issue Paper No 4_Budget City of Tigard a Budget, Audit, and Current Finance Items The City of Tigard has diverse financial processes and needs. These financial services frequently involve other city departments, and in the case of the budget, all city departments. This memo will highlight a few that have occurred recently. Budget Process Financial Audit In Oregon,the budget process is set by state law,creating roles, Tigard must have an annual audit of its financial records.The responsibilities,timeframes,and process steps.Some great audit is performed by an independent auditor and the process is background resources can be found in documents from the Oregon overseen by the Audit Committee.The audit ensures that the city Department of Revenue in their Local Budgeting in Oregon and is using Generally Accepted Accounting Principles(GAAP)when Local Budgeting Manual and from the League of Oregon Cities processing the city's finances.At the end of the process,the city's with their Local Government Basics for newly elected officials financial position is presented in the Comprehensive Annual starting on page 14. Financial Report(CAFR)and this is presented to council in a public hearing prior to the end of the calendar year.Similar to the The budget is a public process that allocates our limited resources budget document,the CAFR is written to standards established by to a virtually unlimited demand and is an expression of the city's the GFOA and consistently wins their Certificate of Achievement for priorities,strategic plan,current issues,and ongoing obligations. Excellence in Financial Reporting. The public process starts when the Budget Officer publishes their proposed budget in early April. In Tigard,Chapter V Section Last year,for the first time,Tigard published a Popular Annual 20A 2 h of the City Charter designates the City Manager as the Financial Report(PAFR),including a version in Spanish.The PAFR Budget Officer.The proposed budget is then considered in a series was established by the GFOA to provide a short financial document of generally two to four public meetings of the Budget Committee that presents some of the basics of the city's finances. This is in which is made up of the elected mayor and council and an equal recognition that the CAFR is a dense technical document and is not number of electors from the city.These meetings occur in late approachable by the general public. Last week,Tigard learned that April and early May.The Budget Committee hears the Budget our first PAFR won the GFOA Award for Outstanding Achievement Officer's Budget Message,considers the budget as presented, in Popular Annual Financial Reporting,making Tigard only the tenth makes changes as a body,and votes to approve the budget and public enterprise in the state to earn this achievement. tax levy. In June,council considers the approved budget. During those budget hearings council may make minor changes, up to ten percent,in any fund.At the conclusion of the budget hearing, council adopts the budget. Finally,during the course of the fiscal year, budget changes are needed. In Tigard,we group these into quarterly budget changes that are acted upon in public hearings during council meetings. Tigard publishes an annual budget document.This document is as much about what the city is doing with the public dollar as it is about saying what line item the dollar was allocated. It is assembled to meet the professional standards set by the Government Finance Officer's Association(GFOA)and consistently wins their award for distinguished budget presentation. Budget, Audit, and Current Finance Items City of Tigard Bonds and Debt Police Safety Levy The city has a number of outstanding debt obligations and Through the actions of council and the approval of Tigard voters,a anticipates issuing debt for some upcoming project needs. In public safety levy was passed in May.This levy added$0.29/$1,000 short, issuing debt is helpful when there are large costs that assessed value to properties in Tigard,generating over$2 million cannot be afforded with existing resources and/or when there in revenue that is dedicated to 8 patrol officers,1 school resource is a generational equity issue where costs should be spread out to officer,training in crisis intervention and de-escalation,and related current and future users of the project.Tigard's existing debt is for: support services.The levy is important because it represents the library building,parks land and facilities,our investment in the a major revenue increase for services that are typically funded Lake Oswego/Tigard Water Project,and urban renewal projects. through general fund resources.Since it is a voter approved levy,it The library and parks debt is general obligation debt, meaning must be renewed by Tigard voters every 5 years. that Tigard voters approved paying for the projects via an Service Level Reserve increase in their property taxes.This debt was restructured this The Service Level Reserve is a budget issue. It was created in spring,saving taxpayers$1.25 million in debt service payments response to direction from the Budget Committee.This reserve over the life of the debt.Tigard's largest debt obligation is on is discussed in the budget document on pages 55-57 and 358- our water system where there is over$120 million in outstanding 359. In short,General Fund expenses grow about 0.5%faster principal.This debt was restructured in October,saving rate than revenues and that is without adding more/new staff and payers$16.5 million in interest costs over the life of the debt. professional services to account for the demands of community Our urban renewal debt is placed with a bank and pays for urban growth. Essentially,Tigard was spending what we had,and renewal projects.While it is paid by urban renewal revenues, it is service levels were slowly slipping.A couple years ago,Tigard backed by the city's full faith and credit. made service level cuts to spend a little less than we bring in. In terms of upcoming debt issuances,there are two areas where We are saving that difference and putting it into the Service this is anticipated to come up.The first is to pay for replacing Level Reserve. We are then appropriating a little(about$400 the city's aging facilities where a combination of voter approved -$500K)each year to help our remaining service levels keep general obligation debt and revenue bonds will pay for planned up with community growth.Since we are frequently using this facilities.The second is additional urban renewal debt for limited one-time resource to pay for ongoing costs,it is a near- additional projects in Downtown and the Tigard Triangle. term solution to a long-term problem of finding additional major revenue increases like the levy to fund the city's needs. Lastly, it is important to point out the city's bond rating. For general obligation debt,the city has the second highest possible Summary rating. This is important in two ways. First,just like an individual This memo represents a survey of some of Tigard's financial credit score,the better the rating the lower interest rate the city processes and issues.Other areas that council acts on and that will pay on debt and the more money will be saved in interest impacts the community include:awarding contracts as the Local payments.Second,the ratings come from independent agencies: Contract Review Board,utility billing which brings in over$50 Moody's and Standard&Poor's.These agencies analyze public million in revenue annually,rate setting for various city services, and private entities across the country. While some factors of and administering the city's business license program. the rating are outside of our control, like the national/regional Should you have any questions,feel free to contact Finance and economy,other factors are directly impacted by the actions Information Services Director Toby LaFrance at toby@tigard-or.gov. of council and staff. The result is that the city's bond rating represents our benchmark for our financial stewardship that is used on the city's Report Card.