These policies provide direction and serve as guidelines for preparation of the annual budget and capital
improvement program. They derive from North Carolina law, the recommendations of the Local Government
Commission and local decisions, and they serve to guide the overall financial management of the City.
Operating Budget and Capital Improvement Program Policies
In keeping with the Local Government Budget and Fiscal Control Act, the City Manager will present a balanced
budget to the City Council no later than June 1 of each year. Continuing practice in Raleigh is to present the
budget in mid-May of each year.
A balanced budget is defined under state law as one in which the sum of estimate net revenues and appropriated
fund balance is equal to appropriations (NC statutes 159-8).
The budget ordinance will cover a fiscal year beginning on July 1 and ending on June 30.
The City Council shall adopt a balanced budget ordinance making appropriations and levying taxes by July 1 of
As provided by NC statues section 159-26(d), the City will maintain encumbrance accounts as “budgetary
accounts.” At the end of each fiscal year, encumbrances outstanding are those amounts of expenditures estimated
to be incurred as a result of the fulfillment of unperformed contracts/purchases in process at year-end. Such
encumbrances are reported as “reserved for encumbrances” against fund balance and are charged to the
subsequent year’s budget.
The City Manager will prepare a recommended Capital Improvement Program (CIP) each year to be presented at
the same time as the annual operating budget. The CIP will address the capital needs of the City over a five year
period. The first year of the CIP will be the Capital Budget and will be adopted as a part of the annual budget.
The City Council will adopt the CIP by resolution.
A Capital Improvement (project) is defined as a physical asset constructed or purchased which has a useful life of
at least 10 years and a minimum cost of $25,000.
Debt or bond financing will not be used to finance current expenditures.
The City may establish one or more internal service funds. At the same time as the budget is presented and
adopted, a financial plan for each internal service fund will be provided. The financial plan will be balanced when
estimated expenditures do not exceed estimated revenues.
The City will seek to develop and maintain a diversified and sustainable revenue system in order to avoid short-
term service level fluctuations.
Revenues are to be conservatively estimated based on a review of historic collections, current and anticipated
changes in legal requirements and rates, percentage change over time and in consultation with external
assessment and collection authorities, where applicable.
General government fees and charges shall be reviewed annually. Revenues supporting the Revolving Fund shall
be set annually so as to recover the full cost of providing those programs and activities.
Utility rates and charges will be reviewed periodically considering net revenue requirements, realistic sales
forecasts, bond covenants and debt management policies, utility conservation goals, capital program requirements
and reimbursement of indirect costs to the General Fund.
The City will pursue opportunities for grant funding for activities and projects consistent with the City’s long range
plans and goals. Grants are adopted by City Council upon recommendation of the City Manager and are approved
as balanced project ordinances (estimated expenditures do not exceed estimated revenues) within the appropriate