City of Lincolnton 2018-19 Budget Review
City Budget Process
- The city manager and staff propose the annual budget and present it to the city council for consideration.
- The city is required to adopt a balanced city budget by June 30 for the upcoming budget year, following a public hearing on the proposed budget. The city council voted to adopt the 2018-2019 proposed budget on June 7, 2018. The budget was unanimously approved (5-0).
Budget (Fiscal) Year
The City of Lincolnton budget year runs from July 1 through June 30 of the following year.
Types of Funds
The city budget consists of 4 different funds:
- General Fund – ($11,271,935) This fund covers most city operations, such as Fire, Parks and Recreation, Police, Streets and Planning. The property tax rate is 56 cents per $100 valuation and has not changed since 2002.
- Powell Bill Fund – ($416,000) This fund shall be expended primarily for the purposes of resurfacing streets within the corporate limits of the municipality but may also used for maintaining, repairing, constructing, reconstructing or widening of any street or public thoroughfare within the municipal limits or for planning, construction, and maintenance of bikeways, greenways or sidewalks.
- Water and Sewer Fund – ($8,378,540) This fund covers the operation and maintenance of the city water and sewer infrastructure and provides drinking water to city customers. There were no increases in rates.
- Electric Fund – ($7,669,264) This fund covers the operation and maintenance of the city electric infrastructure and provides electricity to city customers. There were no increases in rates.
- Population - 10,700
- Water Customers – 5,500
- Sewer Customers – 2,750
- Electric Customers – 2,750
- City Employees - 152
For fiscal year 2018-19, the City of Lincolnton projected revenues for the General Fund totals $11,271,936. The approved budget maintains the tax rate at 56 cents per $100 in property valuation. The largest sources of revenues are Property Taxes, Sales Tax, Franchise Tax and Fund Balance. The following section provides a brief description of the city’s revenue sources by category:
Property Taxes (42.7%)
Permits and Fees (1%)
Sales Tax (25.7%)
Restricted Inter-Government (2%)
Franchise Tax (7.5%)
Unrestricted Inter-Government (3.8%)
Other Taxes & Licenses (.7%)
Sales and Services (.2%)
Recreation Fees (1%)
ABC Revenues (.5%)
DMV Vehicle Tax (1.3%)
Issuance of Debt (2.4%)
Fund Balance (5.9%)
The financial review section is designed to provide information to give the reader an increased level of understanding of how available resources are utilized to provide services. The section blow summarizes the city’s largest sources of revenue and expenses.
General Fund Revenue
Powell Bill Revenue
FUND BALANCE QUESTIONS
What is fund balance?
This is what governments call monies that have accumulated over the years that are set aside for future use. It is similar to a savings account that individuals have. Many people refer to this as the “Rainy Day Fund”.
Where did the money in fund balance come from?
Budgets are done on an estimated basis. Whatever money is not spent each year automatically becomes part of fund balance.
Why does the City need fund balance?
The Local Government Commission that monitors all governmental agencies in NC requires that at least two months of operating costs be kept in fund balance for solvency reasons related to debt service. The minimum amount that must be kept is equivalent to 16% or $1.5 million for the City. In order to plan for unforeseen operational needs, it is necessary to keep more than the required minimum.
Does the City ever spend fund balance?
Yes. Each year, the City spends a portion of the fund balance in the regular budget in order to meet the needs to operate and provide services. The goal is to maintain the fund balance at a constant level. However, in the past several years, the City has had to use more of the fund balance due to lack of total revenues.
How much is the City’s fund balance?
The city’s available General Fund Balance is $3,500,000, or 38%. This is in line with the state average. The chart below indicates a decline in the available fund balance over the past several years. The city is carefully monitoring the budget in order to stabilize revenues and expenses.