The vote followed a 20-minute public hearing held prior to the meeting, during which City Financial Officer Patricia Suttles provided an overview and summary of the ordinance.
What is an
An appropriations ordinance provides the legal authority under which the municipality allocates money to specific spending activities. It also establishes the city’s legal spending limit for the fiscal year, which currently is July 1, 2013 to June 30, 2014.
Under the Illinois Municipal Code, cities have the choice to either adopt an appropriations system or a budget system. An appropriations system requests funding for a specific line item for a specific period of time, such as the term of the fiscal year. A budget system is a comprehensive financial plan which projects both anticipated revenues and proposed expenditures for the fiscal year.
Depending on which system the city has adopted, it is required to adopt that resolution each fiscal year. The City of Metropolis is under the appropriations system and therefore passes an appropriations ordinance.
However, both a budget and an appropriations ordinance are prepared each fiscal year for the City of Metropolis to assist in managing the overall expenditures of the city.
For its 2013-14 fiscal year, the City of Metropolis has $40 million in total appropriations — $10 million is in operating transfers with expenditures of $30 million broken down as $5 million in budgeted projects and $25 million in the day-to-day general operations of the city.
“Our deficit is $1.7 million if we spend everything in the budget,” Suttles noted.
The City of Metropolis has 28 funds that fit into three categories:
• Special revenue funds are self-contained funds that are used to account for revenues and expenditures that must be used for a specific purpose. They do not rely on gaming revenue. For example, hotel/motel tax money goes into the hotel/motel fund which is then used to pay tourism expenses. Moneys collected in the Motor Fuel Tax (MFT) fund are transferred to the Street Department for street improvements.
• Enterprise or proprietary funds are funded through user fees. Examples are utilities (water, sewer and light), garbage and the airport.
• General funds, which consist of the general fund and gaming. They consist of: general (the operations of the city, which includes such things as property/casualty insurance, professional fees and anything that is used by and benefits the city as a whole), mayor, clerk, treasurer, city attorney, financial officer, maping/zoning, economic development, fire, police, animal control, education/scholarships, public buildings (specifically the operation of city hall), senior citizens and the Industrial Park.
A system of transfers
The city transfers both cash and assets between funds.
For example, all gaming revenue is deposited into the gaming fund. Checks are then written out of the gaming fund to those funds that are dependent on gaming revenue, such as the general fund and the street fund. This expenditure out of the gaming fund is an operating transfer to the recipient fund and falls under the $10 million in operating transfers expenditures.
The City of Metropolis actually only expends $30 million, $5 million of which are for projects.
“Transfers between funds make appropriations look more than they really are, that’s why things get built up and kind of snowball,” Suttles said. “It’s because of moving money around from fund to fund. That’s why we have the operating transfers — it’s an accounting thing and it makes everything balance. If it’s an expense in one fund, it’s income in another — it washes itself out.”
The impact of
Until 2010, the utility funds were subsidized by gaming revenue.
“Fortunately, we don’t have to do that any more because we managed to get our fees where they need to be to covers all the costs plus all the projects of those funds,” Suttles said. “Can you imagine what kind of shape we’d be in if we were still subsidizing water or sewer with gaming revenue? There would just not be enough pie to go around.”
For the 2013-14 fiscal year, the city projected its gaming revenue to be $5 million based on the funds generated in 2012-13. For the past fiscal year, the city projected gaming to be $6 million and saw a $1 million deficit.
While gaming isn’t the city’s only source of revenue — it collects $1.8 million off taxes — “when you look at the cost of the general fund — the police, the fire, the street — is more than your gaming revenue,” Suttles said. “If we weren’t able to sustain our proprietary/utility funds through user fees, we would really have a quandary; we’d have a mess.”
And that mess may be around the corner.
Suttles noted that the last time gaming revenue hit the $5 million mark was 1995, three years after the boat opened. “That’s a long time ago,” she said.
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