R-05-03-10-14A1 - 3/10/2005RESOLUTION NO. R -05-03-10-14A1
WHEREAS, the City of Round Rock wishes to adopt a Financial
Management Policy to manage sales tax revenues and to establish
minimum reserve fund levels for the General Fund and the Utility
Fund, and
WHEREAS, the City wishes to adopt the attached Financial
Management Policy, Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS,
That the Financial Management Policy, attached hereto as Exhibit
"A" and incorporated herein, is hereby approved and adopted.
The City Council hereby finds and declares that written notice
of the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to
the public as required by law at all times during which this
Resolution and the subject matter hereof were discussed, considered
and formally acted upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended.
RESOLVED this 10th day of March, 2005.
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CHRISTINE R. MARTINEZ, City Secr
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City of Round Rock
Financial Management Policy
March 10, 2005
Policy Overview
The purpose of this Financial Management Policy ("Policy") is to officially establish a policy for
the management of sales tax revenues generated by Dell Inc. and remitted to the City ("Dell Sales
Tax,") and to establish minimum fund balance reserve levels for the General Fund and the Utility
Fund. This Policy is needed because of the City's continued and growing reliance upon sales tax
revenue in general, and upon Dell Sales Tax in particular, for General Fund operations. The goal
of this Policy is to formalize the goals and objectives of the City Council to comprehensively
manage the impact of sales tax on the City's budget and property tax rate.
Policy Objectives
The objectives of this Policy are:
1) To provide a consistent long-term approach for the fiscal management of the
City's operating funds to balance revenue availability with the service
requirements of a growing population;
2) To provide guidance to manage and reduce the City's reliance on Dell Sales Tax
for the operational portion of the General Fund budget;
3) To provide guidance to manage and reduce the impact of the volatile nature of
sales tax revenue upon the City's budget and property tax rate; and
4) To document the City's fund balance reserve policy.
Policy Components
Sales Tax Component
It shall be the policy of the City to limit the amount of Dell Sales Tax that is utilized for General
Fund operations to no more than 50% of the total amount of sales tax received by the City from
all sources. To implement this policy, the annual increase in Dell Sales Tax utilized for General
Fund operations will be limited to at least 1 percentage point less than the growth rate for sales
tax from all other sources.
In the event that budgeted or actual collections of Dell Sales Tax exceed the aforementioned
limitation, said amounts will be budgeted and utilized for only the following purposes:
1) To reduce the need to borrow additional money by funding capital improvements
EXHIBIT
1
and/or nonrecurring expenditures as approved by the City Council; and
2) To retire existing General Obligation debt when market conditions allow.
The utilization of Dell Sales Tax will be determined in compliance with this policy. The City
Council will make the final decision regarding the utilization of the Dell Sales Tax, based upon
recommendations made by the City Manager.
Fund Balance (Reserve) Component
The minimum fund balance reserve levels for the General Fund and the Utility Fund shall be
established at 33% of the annual budgeted operating expenditures.
2
DATE: March 3, 2005
SUBJECT: City Council Meeting - March 10, 2005
ITEM: 14.A.1. Consider a resolution approving a financial management
policy for the City of Round Rock.
Department: Finance
Staff Person: Cindy Demers, Director
Justification:
As a result of the City of Round Rock's continued and growing reliance on sales tax
revenue for general fund operations and more specifically reliance on a single
source of that sales tax revenue, a formalized financial management policy is
necessary to comprehensively manage and communicate both the short and long -
tem financial objectives of the City.
This policy establishes limitations on t the use of sales tax revenue derived from
Dell Inc. for general fund operations and documents the City's fund balance policy.
Funding:
Cost: N/A
Source of funds: N/A
Outside Resources: N/A
Background Information:
Staff has made several presentations to the Council regarding this item.
Public Comment: N/A
City of Round Rock
Financial Management Policy
March 10, 2005
Policy Overview
The purpose of this Financial Management Policy ("Policy") is to officially establish a policy for
the management of sales tax revenues generated by Dell Inc. and remitted to the City ("Dell Sales
Tax,") and to establish minimum fund balance reserve levels for the General Fund and the Utility
Fund. This Policy is needed because of the City's continued and growing reliance upon sales tax
revenue in general, and upon Dell Sales Tax in particular, for General Fund operations. The goal
of this Policy is to formalize the goals and objectives of the City Council to comprehensively
manage the impact of sales tax on the City's budget and property tax rate.
Policy Objectives
The objectives of this Policy are:
1) To provide a consistent Long-term approach for the fiscal management of the
City's operating funds to balance revenue availability with the service
requirements of a growing population;
2) To provide guidance to manage and reduce the City's reliance on Dell Sales Tax
for the operational portion of the General Fund budget;
3) To provide guidance to manage and reduce the impact of the volatile nature of
sales tax revenue upon the City's budget and property tax rate; and
4) To document the City's fund balance reserve policy.
Policy Components
Sales Tax Component
It shall be the policy of the City to limit the amount of Dell Sales Tax that is utilized for General
Fund operations to no more than 50% of the total amount of sales tax received by the City from
all sources. To implement this policy, the annual increase in Dell Sales Tax utilized for General
Fund operations will be limited to at least 1 percentage point less than the growth rate for sales
tax from all other sources.
In the event that budgeted or actual collections of Dell Sales Tax exceed the aforementioned
limitation, said amounts will be budgeted and utilized for only the following purposes:
1) To reduce the need to borrow additional money by funding capital improvements
and/or nonrecurring expenditures as approved by the City Council; and
2) To retire existing General Obligation debt when market conditions allow.
The utilization of Dell Sales Tax will be determined in compliance with this policy. The City
Council will make the final decision regarding the utilization of the Dell Sales Tax, based upon
recommendations made by the City Manager.
Fund Balance (Reserve) Component
The minimum fund balance reserve levels for the General Fund and the Utility Fund shall be
established at 33% of the annual budgeted operating expenditures.
2