In Colorado, municipal governments, like the Town of Gypsum, follow a budgeting process that is structured in accordance with state and local laws. The budget is typically developed on an annual basis and serves as a financial plan for the upcoming fiscal year.
The budgeting process typically begins with the development of a revenue estimate, which includes projections of tax revenues, fees, grants, and other sources of income. Once the revenue estimate is established, the Town determines its operating costs, including salaries, benefits, and other expenses. The budget priorities each year are largely reflective of the community's needs and input, any State or Federal policy/mandates, and the necessity capital improvement or maintenance projects.
The budget is organized into Governmental Funds, such as the General Fund, which covers the day-to-day operations of the government, and Enterprise Funds which are special revenue funds used for specific programs or projects.
The budget also includes a capital improvement plan, which outlines the Town's plans for infrastructure and other long-term projects. This plan typically covers a multi-year period and is designed to ensure that the government has the resources necessary to undertake necessary improvements and investments.
Throughout the year, the Town staff and Council closely monitors its budget and may make adjustments as necessary. This helps to ensure that the Town remains fiscally responsible and able to meet its obligations to the community.
In a Colorado municipal budget, a General Fund (a.k.a. a Governmental Fund) is used to cover the day-to-day operations of the Town, such as general staffing salaries & benefits, public safety, rec amenities & events, court, elections, and other expenses. This fund is typically financed by sales & property taxes, Real Estate Transfer taxes, building, licensing, service, and permit fees paid by the public, and it is not tied to any specific program or service. A small portion of this fund may also be transferred to other funds to support their functions but is strictly limited.
An Enterprise Fund, on the other hand, is a special fund that is used to finance specific programs or services, such as water, sewer, or trash collection. One key difference between the general fund and an enterprise fund is that the latter is expected to be self-sustaining and function much like a private business. This means that the fees charged to users of the program or service should cover the full cost of providing that service, including all expenses and capital expenditures, without relying on subsidies from the general fund. Therefore, fee increases are sometimes necessary for enterprise funds even when the general fund is healthy. This is because the cost of providing the service may increase due to inflation, State or Federal regulations, changes in technology, or other factors, and the fees charged to users must be adjusted accordingly to ensure that the program or service remains financially sustainable. Additionally, the enterprise fund may need to fund capital projects or replace aging infrastructure, which can be costly.
It's also important to note that enterprise funds are subject to strict accounting and reporting requirements, as they are considered separate legal entities from the Town. This helps to ensure transparency and accountability in the management of these funds, and it allows the public to understand how their fees are being used to support specific programs or services.
