The City of Manchester Budget Series
This multi-part series explores the Manchester municipal budget, beginning with the budgeting process. It will cover:
- Revenues, bonding, taxes, and debt.
- Departmental and schools budgets, and capital improvement budget.
- Enterprise funds, special revenue funds, and permanent funds.
- Related topics such as the tax cap, auditing, risk management, fleet management, and energy savings.
State and city regulation
Budgeting in the City of Manchester is governed by its Code of Ordinances, Chapter 35, “Budget Procedures,” and Chapter 6, “Budgets and Appropriations.” It is subject to the New Hampshire laws, Title III, Chapter 32, “Municipal Budget Law,” for appropriations and expenditures, and Title III, Chapter 33, “Municipal Finance Act,” for bonds and notes.
The total expenditures of all funds in the budget cannot exceed the estimated income, plus any fund balance that is carried forward in excess of reserves. The law governs the placement of reserves into various funds. Any amount left over from that process can be used toward the tax rate in the next year.
The city charter requires an annual audit by an independent certified public accountant, which has been performed most recently by Melanson Health. This audit report was last published March 20, 2017, as a section in the 2016 Comprehensive Annual Financial Report.
Financial management
The Finance Committee, consisting of the entire Board of Mayor and Aldermen, approves the city’s budget and labor contracts, and adopts monetary appropriations.
The Finance Officer, who manages the Department of Finance, is responsible for establishing and maintaining a system of controls and financial reporting for the city’s assets, compiling accounting data for the preparation of financial statements, and monitoring the financial performance of the city’s departments and enterprise funds. The officer issues monthly and quarterly interim reports and forecasted year-end revenue and expenditure/expense balance for all departments for the Board of Aldermen. They are reviewed by the board’s 5-member Committee on Accounts, Enrollment, and Revenue Administration.
The city’s Independent Auditor provides internal controls, and is responsible for auditing the Comprehensive Annual Financial Report, and for conducting investigations, analysis, and research.
Budgetary timeline
The biennial budget process occurs in even years.
- January 31 every 2 years – The mayor must appoint a Standing Committee on Accounts, consisting of 5 aldermen, to audit city accounts monthly.
- January through March – The mayor creates a budget. This year, Mayor Joyce Craig has asked for each department head for several budgets including one with no raises, and several with varying raises, plus lists of everyone who is retiring.
- January through March – The school board creates its budget. The mayor, who sits on the school board, presents it at the same time as the city budget. The aldermen are only permitted to vote on the bottom line. The budget is subject to the tax cap.
- March 31 – The mayor must submit a budget for the next fiscal year to the board of mayor and aldermen. The mayor must also submit a budget message, with the goals she has set for the coming year.
- April to June – Aldermen and mayor negotiate the budget. The aldermen may publish their own budget at this time.
- April to June – Public hearings. One public hearing is required, and the budget must be published 1 week prior to it. Additional public hearings are necessary if the aldermen published numerous amendments to the mayor’s budget, or if the aldermen want to go with their own budget. The school budget also has a hearing, and must be published prior to that.
- Second Tuesday in June – Mayor and Aldermen must adopt a budget.
- June 30 – If the mayor and aldermen fail to reach an agreement on a budget, it defaults to the mayor’s budget.
- July 1 – First day of the fiscal year. It ends on the last day of June.
Budget components
- General Fund– This is the principal fund, accounting for the normal recurring activities of the City, and funded principally by property taxes, user fees, and grants from other governmental units. The tax rate is based on this, and is subject to the tax cap.
- Capital Improvement Budget – This indirectly affects taxes through bonding because the annual payments affect the tax cap.
- Enterprise Funds – These are for the Environmental Protection Division (EPD) for sewage, Water Works, and the Department of Aviation, and Parking Management and Operations. Their expenditures must be within revenues received. Any additional money they receive must be accounted under the tax cap. They are able to go into deficit mode temporarily if they have a plan to make up for it.
Special revenue and permanent funds
Special revenue funds are used to account for revenues legally restricted for specific expenditures:
- HUD Section 108
- Community Development Block Grants
- Other Grants (federal, state, and private)
- Civic Center rooms and meals tax
- Revolving Loan Fund for loans funded by CDBG funds
- Expendable Trust Fund
Permanent funds report resources that must use earnings, not principal, to support their programs.
- Cemetery Trust Fund
- Library Trust Fund
The Comprehensive Annual Financial Repor
The city Finance Department publishes a Comprehensive Annual Financial Report (CAFR), detailing information on the budget, after the fiscal year has ended, most recently for July 1, 2015 to June 30, 2016. It includes:
- An introduction.
- A financial section with an independent auditor’s report, management’s discussion and analysis (MD&A), and other financial information.
- A statistical section (unaudited) with information indicating trends for comparative basis fiscal years.
