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8
Revenue Policy
Revenue estimates are set at realistic and
attainable levels and are updated and revised as
needed.
The City periodically reviews specific programs
and services identified as potential candidates
for user fees. Where appropriate, user fees will
be set at a level sufficient to recover the full
costs of the program or service.
The City's Enterprise operations shall set their
enterprise fees at a level sufficient to recover the
full costs of enterprise operations.
The City maintains an investment portfolio in
which 100% of all idle funds are invested daily.
Capital Improvements Projects
The City shall annually develop a Capital
Improvements Program (CIP) to be adopted in
conjunction with the Annual Operating Budget.
The City shall appropriate all funds for Capital
Projects with a Capital Projects ordinance in
accordance with state statutes.
Operating expenses for all capital projects are
estimated and accounted for in the Capital
Improvements Program.
Capital expenditures included in the CIP are
projects that will cost at least $100,000 and have
a useful life of at least 10 years. Equipment
purchases are considered operating expenses
and are not included in the CIP.
City Council will annually set level-of-service
standards for the quantity and quality of capital
facilities and criteria for the evaluation of capital
project requests.
Debt Management
The City incurs debt only for financing capital
assets that, because of their long-term nature or
due to budgetary constraints, cannot be acquired
from current resources.
Debt financing can include general obligation
bonds, revenue bonds, certificates of
participation,
lease/purchase
agreements,
special obligation bonds or any other financing
instrument allowed under State of North Carolina
general statues.
Interest income is credited to the Debt Service
Fund. This will allow interest income to offset
debt service costs.
The City maintains a Net Debt Per Capita ratio
for all debt at no more than $3,000 and for
general obligation debt at no more than $1,000.
Net Debt Per Capita measures the burden of
debt placed on the size of the population
supporting the debt. Net debt per capita is a
widely used measure of an issuer’s ability to
repay debt.
The City maintains a debt as percentage of
assessed valuation ratio of no more that 4% for
all debt and no more than 2% for net bonded
general obligation debt.
Debt as Percentage of Assessed Valuation
measures debt levels against the property tax
base which generates the tax revenues that are
the main source of debt repayment. The State of
North Carolina sets a maximum ratio level of 8%
of net bonded debt to the assessed valuation for
a city or county.
The City monitors the municipal bond market for
opportunities to obtain interest savings by
refunding outstanding debt. The estimate for net
present savings should be, at a minimum, 2.5%
to 3.0% of the refunded maturities before a
refunding process begins.
Water Resources Financial Policies
The Water Resources Fund maintains a debt
service coverage ratio of approximately 2.0.
Debt Service Coverage Ratio compares net
income available to service debt to annual debt
service requirements.
Water Resources Fund balance will be
maintained in the range of 35% to 50% of the
operating expenses and debt service for the
current operating year budget.
“PAYGO,” or Pay As You Go, financing will be a
consistent strategy for water and sewer
infrastructure investment. The City currently
includes approximately 35% to 50% of PAYGO
funding from water rates and charges.