Budget Process
 
The development and adoption of the City's budget is based upon requirements as set forth in the City Charter and Act 2, P.A. of 1968 of the State of Michigan, the "Uniform Budgeting and Accounting Act".  The following is a summary of the significant legal requirements and City policies which govern the budget process.

Act 2, Public Acts of 1968 of the State of Michigan requires a formal budget for all funds except Internal Service, Enterprise or Public Improvements/Building and Site funds, which require an "informational summary" in lieu of a formal budget.  The City Charter requires submission of the budget to the City Council no later than two months prior to the beginning of the ensuing fiscal year, which begins July 1.  The City Charter further defines the information required to be presented in the budget and the requirements of a public hearing prior to adoption.  The City Charter and State law also require that an appropriations ordinance be adopted, based on approved budgets, no later than one month prior to the beginning of the ensuing fiscal year.  All budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).

As prescribed by State law, the City's general appropriations ordinance must include all Governmental and Expendable Trust Fund types.  This includes the General Fund, all Special Revenue Funds, all Capital Projects Funds and all Expendable Trust Funds.  Proprietary Funds do not require inclusion in the general appropriations ordinance.

The general appropriations ordinance prescribes the legal expenditure limits for all funds required to be included in the ordinance.  The level of control for each fund is based upon the level to which the ordinance details it.  Most budgets are adopted on a fund basis, but the General Fund is adopted to the activity level of various functions or programs within the General Fund.  Administrative control of expenditures is maintained through the utilization of the detailed line item budgets upon which the appropriations ordinance is based.

The City Charter states that at any meeting after the passage of the general appropriations ordinance, with at least one week's printed notice in a city newspaper, the Council may amend the general appropriations ordinance.  Budget amendments may be required due to several factors: receipt of outside grants during the year, expenditures for unanticipated developments and for projects continuing over two fiscal years.  Unexpended appropriations lapse at year-end.

The preparation of the budget begins in December of the prior fiscal year with the distribution of budget worksheets and instructions from the Controller's Office to all departments.  Budgets are submitted by various departments and are presented to the City Manager as "requested" funding.  During January and February, budgets are reviewed by the City Manager and the department heads, with "recommended" funding levels based on (1) goals established by the City Council, (2) available and anticipated funding sources and (3) other financial and administrative concerns and goals.  Based upon these reviews, a document is prepared for presentation to the City council in the form of a "Proposed Budget".

During the budget formulation period of January through March, a minimum of three Public Hearings are held during the regularly scheduled Council meetings in order to encourage public input into the budget process.  The hearings, which are publicized in the local media, request comments or suggestions for the institution, deletion and increased/decreased funding for any programs normally associated with standard municipal operations.  By requesting the input during this time period, comments can be more easily incorporated into the budget process than they can be during the final, formal budget adoption hearing.

In April, the Proposed Budget is presented to the City Council as formulated by the City Manager.  Budget work sessions, open to the public, follow the presentation and represent the City Council's detailed review of all the City's budgets.  Based on these hearings, the Council determines the "final" funding levels of all municipal operations.

In May, based on Charter requirements, two public hearings are held on the Proposed Budget, at which time any changes can be made to the "final" documents based on majority approval of the City Council.  The City budget is formally adopted by the City Council at the second of the two May hearings described above.  The adopted budget represents administrative expenditure levels authorized by the City Council.  Additionally, May hearings result in the adoption of the General Appropriations Ordinance, which sets the legal limits of expenditures, and the Tax Levy Oridinance, which sets the millage rate of the ensuing fiscal year.

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