4.8 SR 10-21-2024 - Laserfiche WebLink

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Financial Management Policies Purpose The City of Elk River is responsible to its citizens to manage its resources wisely and adopting financial policies is an important step to ensure that resources are managed responsibly. The policies provide the framework for the overall fiscal management of the city and guide the decision-making process. Most of the policies represent long-standing principles, traditions and practices which have guided the city and have helped maintain financial stability. These financial policies will be reviewed periodically to determine if changes are necessary. Throughout this policy, every reference to “city” explicitly defines the City of Elk River, Minnesota. Objectives ▪Providing sound principles to guide the decisions of the City Council and management. ▪Providing short- and long-term financial stability by ensuring adequate funding to provide for and protect infrastructure needed by the community today and for the future. ▪Protecting and enhancing the city’s credit rating and prevent default on any municipal obligations. ▪Protecting the City Council’s policy-making ability by ensuring that important policy decisions are not constrained by financial problems or emergencies. Revenue and Expenditure The city will: ▪Provide long-term financial stability through sound short- and long-term financial planning. ▪Estimate annual revenues and expenditures in a conservative manner to reduce exposure to unforeseen circumstances. ▪Project revenues and expenditures for the next five years and will update these projections for each budget process. ▪Establish user charges and fees at a level related to the cost of providing the service (operating, direct, indirect, and capital) when determined to be appropriate and the direct benefits are identifiable. Fees will be reviewed annually. ▪To the extent feasible, apply one-time revenues toward one-time expenditures or place them into reserves. One-time revenues will not be used to finance ongoing programs. Utilities ▪The City Council sets fees and user charges for municipal sanitary sewer utility and garbage collection. The Utilities Commission sets fees and charges for the water and electric utilities. The city will encourage the Utilities Commission to adopt financial management policies similar to the policies stated in this section. ▪The city will strive to set municipal utility users fees at a financially sustainable level. ▪The fee structure for municipal utilities should produce a net annual surplus of revenues over expenditures after accounting for all operating costs, depreciation of capital assets and payment of debt service. ▪All municipal utility funds will maintain adequate cash reserves. The assessment of cash reserves should take into account future capital investments, diversity, and stability of revenues and potential for unanticipated changes in revenues and expenditures. ▪All utility rates should be reviewed annally to minimize the impacts of rate changes and to insure Page 55 of 294