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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1995 <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 fiscal <br />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 can <br />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 budget. <br />Additional interdepartmental or interfund appropriations and deletions are or may be <br />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 for <br />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 />F. CASH AND INVESTMENTS <br />Cash and investment balances from all funds are pooled and invested to the extent available in <br />authorized investments. Earnings from investments are allocated to individual funds on the basis of <br />the fund's equity in the cash and investment pool. <br />The City provides temporary advances to funds that have insufficient cash balances by means of an <br />advance from another fund shown as interfund receivables in the advancing fund, and an interfund <br />payable in the fund with the deficit, until adequate resources are received. <br />30 <br />