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BUDGETING AND FINANCES
The residents of your city are entitled to an
accounting from their municipal officials. The professional management of
city finances demands high standards of personal responsibility. As a
newly elect-ed city official it is extremely important that you understand
the basics of city financial matters. One noted political analyst suggests
two criteria that constituents traditionally use to evaluate the
effectiveness of their local government. What does it provide for them and
what does it cost? The document that should answer these questions is your
annual budget. City Budgets
Your city's annual operating budget should
be the principal policy management tool for governing. It should be the
mechanism to:
- Evaluate city services.
- Measure and compare needs.
- Set priorities and balance community
public service demands against the tax revenues required to furnish
them. Therefore, it is important that governing officials participate in
the policies and decisions that go into building your municipal budget.
Arkansas Law and Budgeting
- Every city and town must have an
annual operating budget approved by its governing body (Hdbk.
14-58-201 through 203).
- The fiscal year of each city and
town shall begin January 1 and end at midnight, December 31 of each
year (Hdbk. 14-71-102).
- Deficit spending is prohibited.
Cities are not allowed to spend more money than they accrue during a
year (Ark. Const. Art. 12 Sec. 4). Exceptions to this rule are made
for capital improvement and rev-enue bonds (Ark. Const. Amend. 62 and
65) and for short term (up to five years) financing (Ark. Const.
Amend. 78 sec. 2).
- All cities and towns must have the
financial affairs of the city or town audited annually by a certified
public accountant or by the division of the Legislative Audit of the
State of Arkansas (Hdbk. 14-58-101).
Major Revenue Sources Available
Revenue sources may differ from city to
city. However, listed below are the major revenue sources available to
Arkansas cities:
- City and County Local Sales
Taxes—Cities and towns share on a population basis most countywide
sales taxes for operating purposes. City voters may authorize city
sales taxes and county voters may authorize county sales taxes.
- Ad Valorem General Fund Property
Tax—set by the governing body, may not exceed five (5) mills. Cities
share three (3) mills of county road tax (Hdbk. 26-25-102).
- General/Street Fund Turnbacks—this
is appropriated from the State Municipal Aid Fund and dis-tributed
to cities based on population according to the most recent decennial
census.
- Franchise Taxes—Investor-owned
public utility retailers pay a franchise tax to cities for use of
public rights of way and streets for the delivery of their services
(Hdbk. 14-200-101).
- Solid Waste/Sanitation
Fees—Cities may charge a fee for the pick up and disposal of
residential, com-mercial and industrial solid waste.
- Fines and Forfeitures—Municipal
ordinances may be enforced by the imposition of fines, forfeitures
and penalties on violators of city ordinances.
- Permit and Inspection
Fees—Cities have the authority to require building permits, safety
inspections and to charge accordingly.
- Parks Department
Revenue—The city may charge fees for participants of city recreation
programs and for concession revenues at the city pool, parks and
community center.
- Occupational Taxes/Privilege
License—The city may charge and collect revenue for the privilege of
doing business or carrying on any trade profession or vocation
within the city limits.
Other Income (Miscellaneous Revenues)
- Outside fire protection fees
- Sale of equipment
- Animal licenses
- Hotel and motel/Hamburger
taxes
- Vehicle licenses
- Interest earned from special
accounts
Purchasing and Bidding
In all first-class cities with the
mayor/council form of government, the mayor or duly authorized
representative has the exclusive power and responsibility to make
purchases of all city supplies, equipment and materials necessary
to conduct the business of the city. The mayor has the authority
to enter into contracts for work or labor on behalf of the city,
after approval of the city council.
- The governing body shall set
out the procedure for all purchases that do not exceed $10,000.
The details for these purchase procedures should be described in
each city's purchasing ordinance.
- When a purchase exceeds
$10,000 the mayor or duly authorized representative should
advertise in the local newspaper for competitive bids.
- Bids must be opened on the
date and at the exact time and place described in the bid notice
published in the newspaper.
- The mayor or duly authorized
representative has the exclusive power to award the bid to the
lowest responsible bidder.
- In emergency situations
where the bidding procedure may not be feasible or practical the
governing body by ordinance may waive the requirements of
competitive bidding (Hdbk. 14-58-303).
Award bids can be controversial. The
bidding process is usually highly competitive. Pressure can be exerted on
all municipal officials. One of the best ways to avoid controversy is to
carefully prepare bid specifications.
Careful bid specification will also increase chances of your getting what
you want and within your budget. If you want specific options, accessories
or particulars you feel will assist you in conducting the city's business,
then state them in the bid specification. Under no circumstances should
the bids be opened, reviewed or discussed until after the official bid
opening. If provided in the specifications, the city can reject any and
all bids.
Cities of the second class and incorporated towns have no requirement for
bidding for these kinds of purchases, although a city could pass an
ordinance to require such.
Here is an exception to the rule: Cities of the first class, second class
and incorporated towns must take bids for any public improvements, which
include the major repair or alteration or the erection of buildings or
other structures or other permanent improvements, exceeding $20,000 in
costs. The law is found at Hdbk. 22-9-203, which also contains the
procedure for taking bids for contracts for public improvements that
exceed $20,000.
Professional Services
Competitive bids are not allowed
when cities seek professional services. Professional services
include con-tracts for legal, architectural, engineering
services, construction management and land surveying (Hdbk.
19-11-802). Cities that need professional services should
advertise for RFP (Request for Proposal) or RFQ (Request for
Qualifications). The RFQ should be evaluated considering the
qualifications and reputation of each professional firm. Many
cities will ask a professional service representative to make an
oral presentation to the entire city council prior to its making
a selection.
Next, the city shall select three qualified firms and then
select the most qualified (Hdbk. 19-11-804). Once a qualified
professional firm has been selected, then the city may negotiate
a contract for the desired professional service (Hdbk.
19-11-805). |
Clintons
Classification Information
The Duties of
Mayor
The Duties of
Aldermen/Council Members
The Duties of
Recorder/Treasurer
City and Town
Council Rules of Procedure and Different Types of Meetings
Proper Ways to
Pass Ordinances and Resolutions
Personnel
Budgeting and
Finances
The Freedom of
Information Act
Complete Guidebook for Municipal
Officials, Handbook for Arkansas Municipal Officials, Procedural Rules for
Municipal Officials and the Handbook for Arkansas Municipal Clerks,
Recorders and Treasures are available in the City Clerk's office for you
convenience.
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