2012-2013 Budget - City of Saginaw MI

for review and approval. If City Council approvesthe action presented, then it is legally enactedthrough the passage of an ordinance.FUNDING RELATIONSHIP BETWEENOPERATING AND CAPITAL BUDGETSThe operating budget includes expenditures thatgenerally recur annually and are appropriated for asingle year. These include personnel, utilities,professional services, supplies, and maintenancecosts. It provides for all city services, but does notresult in major physical assets in the city. Majorsources to fund the operating budget are generatedin taxes, state revenue sharing monies, grants, userfees, fines and forfeitures, intergovernmentalpayments, one-time revenue sources, andappropriations of uncommitted or unrestricted fundequity.The capital budget, in contrast, usually includesone-time expenses for projects that may last morethan one year. The result of these projects isphysical assets to the city. Wide fluctuations areexpected in the capital budget from year to yeardepending on the phasing of projects and resourcesavailable to fund these projects. Resources for thecapital budget generally come from the issuance ofGeneral Obligation Bonds or Revenue Bonds,Federal or State aid programs, grants, orfoundations, service groups, business and privatedonations.repaid over the useful life of the improvementbeing financed.It must be mentioned that there are certain fundsthat are legally restricted to certain types ofprojects. For example, Major and Local StreetFunds, wherein revenues are derived, for the mostpart, from the State of Michigan Gas & WeightTax; and the Water and Sewer Operations andMaintenance Funds, wherein revenues are derivedfrom user fees. [Any of these funds and othergovernmental funds projects may be purchased byusing cash or through a bond issuance.]Projects are considered for financing through abond issue if they meet certain criteria. Theseinclude projects of a significant dollar amount,which is over $1 million, and a useful lifeexceeding the length of the bond issue. Anotherconsideration for a capital project is to spread theannual cash requirements of a debt issue over timeso future users share in the cost of the project.Regardless of the differences, the operating budgetassumes the cost of maintaining and operating newor renovated facilities that involve capitalinvestment. In many instances, the operating budgetwould have to be adjusted on an ongoing basis.Capital Improvement Budgets, on the other hand,will result in decreases in maintenance coststhrough the replacement or improvement of olderless efficient facilities, equipment, or vehicles.The operating budget also includes debt serviceappropriations for the payment of long-term debt,principal, interest and related costs. The majority ofthe city’s capital improvement costs has beenfunded through the issuance of tax supportedgeneral obligation bonds, and utilities user feesupported revenue bonds, which are generally329