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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />1. Summary of Significant Accounting Policies (Continued) <br />G. Conduit Debt Obligations (continued) <br />The City also issued lease revenue bonds during 2015 to provide funding to a nonprofit entity <br />for a project deemed to be in the public interest. Although these bonds bear the name of the <br />City, the City has no obligation for such debt. Accordingly, the bonds are not reported as <br />liabilities in the financial statements of the City. As of December 31, 2016, the outstanding <br />principal amount of these bonds was $8,800,000. <br />2. Stewardship, Compliance, and Accountability <br />Budgetary Information <br />Annual budgets are adopted on a basis consistent with accounting principles generally accepted <br />in the United States of America. Annual appropriated budgets are legally adopted by Council <br />resolution for the General Fund, certain Special Revenue and Debt Service Funds and the <br />Property and Equipment Acquisition Capital Project Fund. Formal budgetary integration is <br />employed as a management control device during the year for the General Fund, Special <br />Revenue Funds, Debt Service Funds and the Property and Equipment Acquisition Capital Project <br />Fund. Budgetary control for other Capital Project Funds is based on a project completion time <br />cycle rather than an annual basis, therefore budgetary comparisons on an annual basis would not <br />present meaningful information. The City follows these legal compliance procedures in <br />establishing the budgetary data reflected in the financial statements. <br />Budget requests are submitted by all department heads to the City Administrator. The <br />Administrator's office compiles the budget requests into an overall preliminary City <br />budget, balancing budget requests with available revenue. <br />2. The preliminary budget is submitted to the City Council in September for its review <br />and/or modification. <br />3. City administration presents the proposed budget to the City Council which in turn holds <br />a truth -in -taxation public hearing on the proposed budget. The budget resolution adopted <br />by the City Council sets forth the budget at the fund level for the General Fund, Special <br />Revenue Funds, Debt Service Funds and certain Capital Projects Funds. <br />M <br />