City Of Sparks

City Budgeting 101

Question 1-- What is the total operating budget for the City of Sparks, and the breakdown of the revenue the city receives to pay its costs to serve the residents of Sparks?
Question 2 -- What is the timeline for the city budget process and what is the state involvement?
Question 3 -- Is there one pot of money used to pay for all City of Sparks operations, such as staff salaries and benefits, equipment, and construction projects?
Question 4 -- Is there one pot of money used to pay for all City of Sparks operations, such as staff salaries and benefits, equipment and construction projects?
Question 5 -- Are all departments of the City of Sparks subsidized by the city's General Fund? Or are there some city departments or city-provided services that get their entire budget from taxes or fees?
Question 6 -- But what about the fees the City of Sparks collects through such activities as issuing business licenses, building permits or temporary work permits?
Question 7 -- Does the City of Sparks ever collect money that it can use only for a single purpose?
Question 8 -- Does the City of Sparks receive money from the state and/or the federal government? If so, how much? And can the city council raise additional money or new revenue by taxing residents?

Question 1-- What is the total operating budget for the City of Sparks, and the breakdown of the revenue the city receives to pay its costs to serve the residents of Sparks?
 
In its 2009-10 fiscal year, which started July 1, the City of Sparks will spend its $63 million operating budget out of a handful of municipal accounts.

"Governmental agencies are required to account for their financial transactions by using what the accounting world calls 'Funds' which are really just separate pots of money for the city's various activities," said Adam Mayberry, spokesman for the City of Sparks.

For the most part, the city pays the bills for its day-to-day operational functions out of one big pot of money called the General Fund (also commonly referred to as the Operating Fund).
However, some activities, such as parks and recreation, are paid for out of separate Funds that are required by law or have been set up by city management.  Some of these Funds do receive a portion of their money from the General Fund, but primarily, these Funds have their own sources of revenue.

This year, $5.4 million from the General Fund will go to these Funds, with another $1.6 million set aside out of the General Fund for contingencies - i.e., unexpected events such as floods or a continuing economic slide.

The General Fund gets much its money from a variety of sources.  One of the largest sources is distributed from the State Department of Taxation called Consolidated Taxes: which are a combination of sales taxes, cigarette and liquor taxes, real property transfer taxes and the government services tax, which used to be called the motor vehicle privilege tax.

Another major money source is property (also called "ad valorem") taxes.

Combined, these two sources accounted for 67.8 percent of the General Fund revenue in the City of Sparks' 2007-08 fiscal year, the most recent for which figures are available.

The rest of the money comes from various licenses, permits, fines and charges for services.
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Question 2 -- What is the timeline for the city budget process and what is the state involvement?
 
The City of Sparks is required to file its' budgets with the Nevada Department of Taxation, which monitors the budgets and financial activities of the state's local government agencies.

Tentative budgets for each fiscal year are due by the preceding April 15, with final budgets due by June 1.
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Question 3 -- Is there one pot of money used to pay for all City of Sparks operations, such as staff salaries and benefits, equipment, and construction projects?
 
"Actually, there are several pots of money - which are referred to by the accounting term 'Funds' - that the City of Sparks uses to account for its operations," city spokesman Adam Mayberry said.

Government agencies account for the money they spend on their various operations under the headings of Government-Type Activities, Business-Type Activities and Fiduciary Activities, though there often are expenses that fall outside these three main categories.

The Government-Type Activities category includes what people generally think of as typical city expenses, such as police and fire protection; these activities get their money primarily from the taxes and fees that Sparks residents and business owners pay.

The City of Sparks accounts for its Government-Type Activities with four types of Funds:

  • The General Fund for functions such as police and fire services, public works and so forth.
  • Special Revenue Funds, which are used to account for money that the city gets through grants, municipal court assessments, impact fees, parks and recreation fees and other non-tax sources.
  • Debt Service Funds, which are used to account for the payment of the city's debt obligations.
  • Capital Projects Funds, which are used to account for the City's major construction projects.

The Business-Type Activities category covers costs that are paid for primarily by customers or direct-end users. Two types of Funds cover these activities:

  • Enterprise Funds, which are used to account for the City's sewer treatment activities and community development activities.
  • Internal Service Funds, which combine the costs incurred for the City's motor pool, office supply pool and self-insurance pools, all of which are then allocated to the other Funds of the City.

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Question 4 -- Is there one pot of money used to pay for all City of Sparks operations, such as staff salaries and benefits, equipment and construction projects?

Fund established for income and expenses of non-governmental agencies.   By Sean M. Grady
Last week's discussion of how the City of Sparks pays for its activities covered two categories of funds.

To review the first two categories:

  •  Government-Type:   Activities include funds that cover emergency services, major construction projects and other city functions, as well as debt payments.  This money comes mostly from local taxes and fees, though it also can include some non-tax sources such as government grants.
  •  Business-Type Activities covers such functions as community development, sewer treatment, motor pool and office expenses, and so forth.  These activities generally pay for themselves via customer or direct-end-user fees.  

The city's final accounting category is Fiduciary Activities, which covers funds that have been established to handle the income and expenses of  non-governmental or quasi-governmental agencies.

In other words, through the Fiduciary Activities category, Sparks serves essentially as the money manager for organizations that exist outside the city government, though these organizations usually have some tie to the city's official interests.

Government agencies frequently take on this type of work to remove some of the administrative burden from these types of outside but allied organizations.    This money is not legally considered to be part of the city's assets. Rather, the city is acting as the custodian of these funds.  Examples include a medical benefits trust fund that benefits city employees and the Regional Transportation Commission's Road Impact Fund.

Aside from Government-Type, Business-Type and Fiduciary Activities, the city's finance department also accounts for the financial activities for the Sparks Redevelopment Agency, as well as the Truckee Meadows Regional Planning Agency.
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Question 5 -- Are all departments of the City of Sparks subsidized by the city's General Fund? Or are there some city departments or city-provided services that get their entire budget from taxes or fees?
 

Fees collected help pay for City of Sparks services.  For most areas of Sparks city government, the answers to these two questions are "yes" and "no," respectively. The one exception to this rule is the city's sewer treatment activities, which are completely paid for by the various fees - service fees, connection fees and so forth - the city collects.

Another example of a department where fees specifically are dedicated to paying for a single agency's expenses is the Sparks Parks and Recreation Department. That department has a host of special events, community classes and other programs for which it charges fees most residents can afford.

The money that comes in from the participants does not fully cover all the costs of providing these activities, but it helps offset expenses needed to offer each year's schedule of activities.  For the city's 2009 fiscal year, the Parks and Recreation Fund received $3,004,000, or 37.2 percent of its money, primarily from fees it collected, according to figures from the city's finance department.

The remaining 62.8 percent of its budget - $5,078,000 - came from the General Fund.

Otherwise, the money for each department's yearly expenses comes from the city's General Fund, which in turn gets much of its money from the taxes Sparks residents and businesses pay, including sales and property taxes.
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Question 6 -- But what about the fees the City of Sparks collects through such activities as issuing business licenses, building permits or temporary work permits?

"Most license and permit revenue is General Fund revenue, but other permits such as building permits are revenue for a different fund called the Community Development Services Fund"; said Jeff Cronk, accounting manager for the City of Sparks.
 
For the 2009 fiscal year, total General Fund license and permit revenue came to $10,816,000, or 17.2 percent of total General Fund revenues, with the rest coming from taxes and other miscellaneous revenue sources.
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Question 7 -- Does the City of Sparks ever collect money that it can use only for a single purpose?

Actually, most of the money the city receives carries such restrictions in one form or another. Many of these restrictions come from outside agencies. State and local laws decree that some revenue the city collects has to be used for specific activities that are designated by law.

Other restrictions come directly from funding sources, such as with federal or other grants; by contract, as with bond covenants and user fees; or for other legal reasons.

In all cases, though, these restrictions are imposed on the city as a requirement for obtaining this money, most commonly when the City receives a grant from an external agency that specifies how that money is to be spent.

For example, in its 2009 fiscal year, Sparks received $132,560 from the U.S. Department of Justice through two grant programs, the Justice Assistance Grant and the Stop Violence Against Women Grant.  Both grants benefited the Sparks Police Department, but each grant had to be accounted for separately. The $53,679 Justice Assistance Grant went for such items as equipment and training, while the $78,881 Stop Violence Against Women funds paid for staffing and supplies related just to that activity.
 
The city government also can impose its own restrictions or specifications for how its money will be used. For instance, the city receives 91.61 cents out of the $3.6167 for every $100 in assessed valuation that Sparks residents pay for property taxes. Of that 91.61 cents, the city has designated one cent to be used for debt service payments during fiscal year 2010.
 
Sparks also receives money from room taxes that must be used to enhance the City's tourism and marketing activities, and certain franchise fees must be used to pay for road work.
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Question 8 -- Does the City of Sparks receive money from the state and/or the federal government? If so, how much? And can the city council raise additional money or new revenue by taxing residents?
 
First off, yes, the city does receive money from both the state and federal governments. Although most state grants ultimately come from the federal government in the form of grants authorized by the United States Congress.

The city gets some money directly from various agencies in the federal executive branch, such as the Department of Justice or the Department of Housing and Urban Development.

Other amounts come to the city via the state government, which acts as a "pass-through" agency: it receives grants from the federal government and divides it among local governments that apply for a share of the money.  
During the 2008 fiscal year, for example, the city received and spent a total of $2.1 million from federal grants.
 
As for raising additional money or tapping new sources of revenue, the Nevada Revised Statues do not grant local municipalities the authority to establish new taxes on their own or to raise existing tax rates above the limits established by statute.

However, the City does have a limited ability to charge fees for various activities, some of which - such as franchise fees - are still capped by statute.  
  Budget Money Scale
Property tax is one of the primary revenue sources for the City of Sparks, and the property-tax rate for Sparks residents by law cannot exceed $3.66 per $100 of assessed valuation.

For the 2008-09 fiscal year, the one most recently completed, the property-tax rate for residents within the City of Sparks was $3.6168 per $100 of assessed valuation.

Thus, the City has the ability to raise property-tax rates by $0.432 per $100 of assessed valuation, the difference between the allowed maximum rate and the actual current rate.

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