Newcastle Municipal Budgeting Processes
Introduction and Overview of How Newcastle's Budget is Made
Published: Monday, March 15, 2021
From the City Manager’s Office:
Let’s talk budgeting. Municipal budgeting is multifaceted and requires careful planning to ensure tax dollars are appropriated with prudence, transparency, and stewardship. Newcastle’s budgeting process begins in March with numerous management and staff meetings to determine departmental needs, capital expenditures, analyze past and expected revenue collections, and formulate a budget presentation for City Council to review.
Council review takes place in the month of May and any requested adjustments are made prior to budget adoption in June.
This post will discuss a few of the funds and their uses. More posts will follow to eventually cover all the different types of funds employed by the City and NPWA. Funds within the budget are created by either state statute requirements, ordinance, and/or resolution. The attached graphic shows the different types of funds established by the City Council and Newcastle Public Works Authority (Trust).
General Fund (01)
This fund encompasses all aspects associated with City personnel salaries and benefits, operations, and capital expenditures. Revenues for this fund are primarily generated through sales and use tax. However, there are other revenue sources that are received into this fund, restricted and unrestricted. It is the goal of the City Council each fiscal year during the budget process to maintain a reserve fund balance of 15 to 25 percent for emergencies that could negatively impact operations. For example, disasters causing significant damage within the City could impede sales tax collections leaving a void in revenues used to pay salaries. In this instance, monies from the reserve fund balance could be used to shore up losses in revenue and allow payroll to continue. Newcastle’s contracted accounting firm suggests a minimum reserve fund of 15%.
Fire Department Tax Fund (03)
A one-half cent sales tax was approved by voters in 1998 to fund a paid fire department. Funds received from this tax are transferred into the general fund where they are wholly appropriated for fire department personnel, operations, and capital improvements. Fire department staffing has increased from 6 personnel in 1998 to 18 full-time positions, today. In 1998, the fire department relied on donated trucks and equipment from various sources to respond to emergencies. Beginning in 2005, the City began purchasing new apparatus every 7 years to ensure Newcastle firefighters could respond to the needs of citizens safely and consistently. Federal mandates and NFPA regulations require the replacement of equipment and personal protective equipment every 10 to 15 years, making this fire department tax fund imperative to emergency response capabilities.
Capital Improvement Tax Fund (04)
In 1997, voters passed a one-half cent sales tax for capital improvements. The tax is divided into two separate uses. 70% of the one-half cent tax is dedicated to streets and roads. 30% of the one-half cent tax is dedicated to capital improvements to municipally owned, occupied, or leased buildings, facilities, and related projects as well as support for municipal programs, including, but not limited to, services for seniors and youth. Prior to this tax implementation, roads in Newcastle were primarily gravel or a combination of various materials. While there are a few roads that remain gravel and work to be done, the City has made great strides in road improvements. Every budget year, road projects are presented to City Council for the upcoming fiscal year, including, overlays, chip-seals, and new construction. Costs for one mile of 2-inch asphalt overlay averages between $165,000 and $195,000. The 30% portion of the one-half cent sales tax continues to provide funding for the senior citizens center, boy-scouts, and cub-scouts.
Please look for more posts on the City’s Facebook page and website related to budgeting in the near future.