Village Finance

The Budget Cycle Overview #

The village fiscal year is the calendar year, January 1 through December 31.

The annual budget cycle follows this sequence:

1. July. The fiscal officer prepares the tax budget. Council adopts it and submits it to the county auditor by mid-July.
2. August through September. The county budget commission reviews the tax budget and issues the official certificate of estimated resources.
3. January. Year-end balances are certified. The certificate of estimated resources is updated.
4. January through March. Council adopts a temporary appropriation measure, then the annual appropriation ordinance.
5. Throughout the year. Amended certificates and supplemental appropriations are processed as needed.

The Tax Budget #

The tax budget is required unless the village qualifies for exemption under ORC 5705.281.

The fiscal officer prepares the tax budget. It shows estimated revenue and planned expenditures by fund for the coming fiscal year.

Council must adopt the tax budget and submit it to the county auditor by July 15 to July 20, depending on county deadlines.

The county budget commission reviews the tax budget and completes its review by September 1.

Certificate of Estimated Resources #

The county budget commission issues the certificate of estimated resources. It shows total estimated revenue available for each fund.

The fiscal officer cannot certify the availability of funds beyond what the certificate shows.

Amended certificates may be requested throughout the year when actual revenues exceed or fall short of original estimates. ORC 5705.36

An amended certificate does not require council approval. The fiscal officer requests it directly from the county budget commission.

Appropriations #

Temporary Appropriations

Council may adopt a temporary appropriation measure in January. Temporary appropriations remain in effect until the permanent appropriation ordinance is adopted or until April 1, whichever comes first. ORC 5705.38(A)

Annual Appropriation Ordinance

Council adopts the annual appropriation ordinance after receiving the official certificate of estimated resources. Total appropriations in each fund cannot exceed the estimated resources shown on the certificate.

Supplemental Appropriations

Supplemental appropriations may be adopted during the year when additional revenue becomes available and an amended certificate supports the increase.

Lapsing

All appropriations lapse at the end of the fiscal year. Encumbered amounts carry forward into the next year.

Expenditure Rules #

No expenditure may be made unless council has appropriated funds for that purpose. ORC 5705.41(B)

Before any contract or purchase order is issued, the fiscal officer must certify that sufficient funds are available. This is the "then and there" certificate. ORC 5705.41(D)

Limited exceptions exist for de minimis amounts and recurring expenses that are part of regular operations.

Blanket certificates may be used for recurring expenditures of a known type over a defined period. ORC 5705.41(D)(3)

Officials who authorize expenditures without proper appropriation and certification can be held personally liable for the amount spent.

Funds #

Common village funds include:

• General Fund. The primary operating fund for general village expenses.
• Street Construction, Maintenance, and Repair (SCMR). Receives gasoline tax and motor vehicle license fee revenue. Restricted to road-related purposes.
• Water Fund and Sewer Fund. Enterprise funds supported by utility revenue.
• Capital Improvement Fund. For infrastructure and equipment purchases.
• Bond Retirement Fund. For payment of principal and interest on outstanding bonds.
• Special Revenue Funds. Created for revenue with legally restricted uses.

The fiscal officer maintains a separate ledger for each fund. Revenue and expenditures must be tracked within the correct fund at all times.

Interfund transfers require authorization by council ordinance or resolution.

Inactive funds with no activity for two consecutive years may be closed.

Revenue Sources #

• Property Tax. Includes inside millage (within the 10-mill limitation) and outside millage (voter-approved levies beyond 10 mills).
• Municipal Income Tax. Administered through RITA, CCA, or self-collection. Requires voter approval or council enactment depending on the village's charter status.
• Local Government Fund. State-distributed revenue allocated by the county budget commission.
• Motor Vehicle License Tax. County-distributed based on road mileage and population.
• Gasoline Tax. State-distributed for road-related purposes only.
• Utility Revenue. Water, sewer, and other utility charges collected from ratepayers.
• Fines, Fees, and Permits. Mayor's court fines, building permits, zoning fees, and similar charges.
• Intergovernmental Grants. Including CDBG, OPWC, ODOT, and other state and federal programs.

Reporting Requirements #

The village must file an Annual Financial Report with the Auditor of State within 60 days of the end of the fiscal year. For non-GAAP villages, the deadline is March 1.

The report is filed electronically through the Hinkle System.

The fiscal officer must present monthly financial statements to council showing the status of each fund.

State audit frequency varies by village size and total revenue. Smaller villages may be audited every two or four years.

Findings for recovery may be issued by the Auditor of State when expenditures are made without proper authorization. The responsible officials may be required to repay the funds.

Public Deposits and Investments #

Deposits

Village funds must be deposited in eligible public depositories. ORC 321.01, ORC 733.44

Deposits above FDIC insurance limits must be collateralized by the depository institution.

Investments

Authorized investment options include:

• STAR Ohio (the state treasury investment pool)
• U.S. Treasury obligations
• Certificates of deposit
• Commercial paper meeting statutory requirements

All investment activity must comply with ORC 135.14.

The fiscal officer manages investments within the framework of an investment policy adopted by council. Council should adopt a written investment policy and review it periodically.