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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1996 <br />Encumbrance accounting, under which purchase orders, contracts, and other commitments for the <br />expenditure of monies are recorded in order to reserve that portion of the appropriation, is not <br />employed by the City because it is at present not considered necessary to assure effective budgetary <br />control or to facilitate effective cash management. <br />E. LEGAL COMPLIANCE - BUDGETS <br />The City follows these procedures in establishing the budgetary data reflected in the financial <br />statements: <br />1. The City Administrator submits to the City Council a proposed operating budget for the <br />fiscal year commencing the following January 1. The operating budget includes proposed <br />expenditures and the means of financing them. <br />2. Public hearings are conducted to obtain taxpayer comments. <br />3. The budget is legally enacted through passage of a resolution on a departmental basis and <br />can be expended by each department based upon detailed budget estimates for individual <br />expenditure accounts. <br />4. The City Administrator is authorized to transfer appropriations within any department <br />budget. Additional interdepartmental or interfund appropriations and deletions are or may <br />be authorized by the City Council with fund (contingency) reserves or additional revenues. <br />5. Formal budgetary integration is employed as a management control device during the year <br />for the General Fund. <br />6. Legal debt obligation indentures determine the appropriation level and debt service tax levies <br />for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to <br />determine and calculate user charges. These debt service and budget amounts represent <br />general obligation bond indenture provisions and net income for operation and capital <br />maintenance and are not reflected in the financial statements. <br />7. A capital improvement program is reviewed periodically by the City Council for the Capital <br />Project Funds. However, appropriations for major projects are not adopted until the actual <br />bid award of the improvement. The appropriations are not reflected in the financial <br />statements. <br />8. Expenditures may not legally exceed budgeted appropriations at the total fund level. <br />Monitoring of budgets is maintained at the expenditure category level (i.e., personal services, <br />supplies; other services and charges; capital outlay) within each activity. <br />9. The City Council may authorize transfer of budgeted amounts between City funds. <br />34 <br />