Glossary of Budget Terms
The language around budget development is fairly specialized, but this list, which runs from "accounting system" to "year end" should help.
Accounting System - The total set of records and procedures used to record, classify, and report information on the financial status and operations of an entity.
Activity - A unit of budgetary accountability and control that encompasses specific and distinguishable lines of work performance for the purpose of accomplishing a function for which the City is responsible.
Adopted Budget - The budget document formally approved by the City Council.
Allocated Costs – A method for allocating overhead time and other expenses to activities that provide direct services.
Allotments - Management allocation of appropriated funds subject to legal constraints.
Appropriation - An authorization granted by the City Council to make expenditures and to incur obligations for purposes specified in the Appropriation Ordinance. An appropriation is usually for a fixed amount and time limited, and must be expended before the deadline.
Assessed Valuation - A valuation set upon real estate or other property by the County Assessor and the State as a basis for levying taxes.
Authorized Positions - Positions approved by the City Council which may or may not have funding (see Budgeted Positions).
Asset Forfeiture Fund - This fund accounts for the proceeds from sale of assets seized primarily from illegal narcotics activities. Asset Forfeiture funds are used for law enforcement purposes.
Base Budget – Those resources necessary to meet an established and existing service level.
Basis of Budgeting - Basis of budgeting refers to the method used for recognizing revenues and expenditures in budget. The City uses the modified accrual basis of accounting for budgetary purposes, which is in compliance with Generally Accepted Accounting Principles.
Beginning Fund Balance - Fund balance available in a fund from the end of the prior year for use in the following year.
Bond - A City may raise capital funds by issuing a written promise to pay a specified sum of money, called the face value or principal amount; at a specified date or dates in the future, together with the periodic interest at a specified rate.
Bond Interest and Redemption - Payment of interest and principal on an obligation resulting from the issuance of bonds.
Budget - A planning and controlling document for financial operation with estimates of proposed expenditures and revenues for a given period of time, usually one year. A plan or action expressed in figures.
Budget Calendar - The schedule of key dates or milestones that a government follows in the preparation and adoption of the budget.
Budget Document - The official written statement prepared by the budget office and supporting staff.
Budget Message - A general written description summarizing the proposed budget. The budget message explains principal budget issues against the background of financial experience in recent years and presents recommendations made by the City Manager.
Budget Modification – A change of expenditure levels and corresponding resources needed to accomplish an existing service level or unanticipated service. All budget modifications are reflected in the current year budget and are approved by the City Council through the Annual Appropriations Ordinance.
Budgeted Positions - The number of full-time equivalent positions to be funded in the budget. Example: Funding of two half-time positions would equal one full-time equivalent position.
Budget Supplement – A request for an increase or decrease in an existing service level (over and above the base budget).
Capital Improvement Budget - A plan for capital expenditures and the means of financing them, to be incurred each year over a fixed period of years, to meet capital needs arising from long-term work program. Included are expenditures made for land, building, permanent public works projects, major reconstruction or renovation of structures, and major landscaping or park improvements.
Capital Outlays - Expenditures for the acquisition of capital assets.
Carry-over Balance - Balance of funds brought forward from prior years.
CDBG - The Community Development Block Grant is a federal program for the development of housing and community projects. Funds are awarded to community based agencies on an annual basis to carry out these activities
City Charter - Legal authority approved by the voters of the City of Berkeley under the State of California Constitution establishing the government organization.
Community Agencies - Non-City agencies in Berkeley which provide public services with some financial assistance from the City. These monies may come either from the General Fund, CSBG or CDBG.
Community Condition Indicator – A statistical measure of existing conditions within the City. These provide tangible and quantitative expressions of the General Plan’s goals, while some indicators directly impact City services.
Contingency - Funds appropriated by the City Council for unforeseen needs.
Consultants - Fees paid to outside individuals who provide advice or services.
Debt Service - Actual cost of interest and principal on bond maturities as well as revenue anticipation notes.
Deficit: The amount by which government spending exceeds government revenues. (Also see: structural deficit)
Description - Contains a list of the typical activities of programs.
Department - An organizational unit comprised of divisions or programs. It is possible for a department to be comprised of only one division.
Discretionary Revenue - Money that the City Council has the authority to allocate for any purpose. Often refers to the General Fund, as opposed to Special Funds.
Division - A functional grouping of related activities within a department. There are usually several activities within a division.
Dual Appropriation - Revenue that is initially budgeted for receipt in one fund and subsequently transferred for expenditure in another fund.
Employee (Fringe) Benefits - The cost to the City for contribution to employee retirement, social security, health and workers' compensation programs.
Employee Years - The number of positions that full-time employees would occupy during a regular work period. For example, two half-time employees would constitute one employee year.
Encumbrance - Funds not yet expended and are delegated or set aside in anticipation of an expenditure in the form of a purchase order, contract, or other commitment, chargeable to an appropriation. These funds cease to be an encumbrance when paid.
Enterprise Fund - Established to finance and account for the operation and maintenance of facilities and services which are predominately self-supporting by user charges.
Expenditure - Designates the cost of goods delivered or services rendered, whether paid or unpaid. Where accounts are kept on the accrual or modified accrual basis of accounting, costs are recorded when goods are received or services rendered. Where accounts are kept on a cash basis, expenditures are recognized when the cash payments are made.
Fair Market Value - The value of a piece of real estate in the open market. Used to determine the assessed value of property for taxing purposes.
Fees - A charge to cover the cost of services (e.g., building inspection fee, zoning fee, etc.).
Fiscal Year - A twelve-month period of time to which the budget applies. For the City of Berkeley, this period is from July 1 through June 30.
Fixed Asset – A tangible item of a long-term character such as land, buildings, furniture, and other equipment with a unit cost in excess of $5,000.
Fringe Benefits - Benefits to City employees, in addition to salaries, paid by the City. These benefits include social security, pensions, workers' compensation, unemployment compensation, life and health insurance.
Full Time Equivalency (FTE) - One or more employee positions totaling one full year of service or approximately 2080 hours a year.
Fund - A independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources, together with all related liabilities, obligations, reserves and equities which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations.
Fund Balance – Within a specific operating fund, the net of expenditures and revenues.
Funding Source – Identifies fund(s) that will provide resources for City expenditures.
Gas Tax Fund – This fund is required by State law to account for gas tax revenues received from the State and expended for construction and maintenance of City streets.
General Fund - The primary fund of the City used to account for all revenues and expenditures of the City not legally restricted as to use.
General Obligation Bond - A bond whose repayment is guaranteed by pledging all the assets and revenues of a government agency.
General Plan – The General Plan is a long-range planning document that provides the City a framework for action and the direction in which to focus that action. General Plan Elements are areas in which the City has elected to administer and manage the delivery of services to its community.
General Revenue - General sources of income the City collects and receives into the Treasury for public use (e.g., property tax). There are no restrictions as to the use of these monies - often referred to as Discretionary Revenue.
Grant - A contribution from one government unit to another, usually made for a specific purpose and time period.
Interfund Transfers - Monies appropriated from one fund to another fund. This is done to reimburse the fund for expenses or to finance the operation of the other fund.
InterDepartmental Charges - Departments charging to perform or provide specific services to other City departments on a cost for services basis. The services performed are charged to the using department.
Internal Service Funds – These are funds used to account for the financing of goods or services provided by one department or program to other departments or programs of the City on a cost-reimbursement basis.
Lost Time - A measure used by departments to measure excessive absenteeism. It is derived by adding an employee's sick time, workers' compensation, and any other unpaid absences.
Mandate (Mandated Services) – A legal requirement, usually imposed by State or Federal law. This term is used to refer to City services, which are provided to comply with State or Federal laws.
Materials, Supplies and Services - Expenditures for materials, supplies and related services which are ordinarily consumed within a fiscal year and which are not included in department inventories.
Municipal Code - A book that contains City Council approved ordinances presently in effect. The Code defines City policies in various categories.
Objectives - Identifies the desired results of the activities of a program.
Operating Budget – A programmatic, financial, and organizational plan for furthering the goals of the City Council through departments of the City, which does not include capital improvement projects.
Operating Expenses –Expenses incurred as a result of day-to-day operations.
Ordinance - A formal legislative enactment by the City Council. It has the full force and effect of law within the City boundaries unless it is in conflict with any higher form of law, such as a State statute or constitutional provision. An ordinance has higher legal standing than a resolution. A law set forth by a government authority, specifically, a municipal regulation.
Performance Indicator – A performance indicator is a measurement designed by a reasoning process to determine whether or not a service objective has been met. It measures the effectiveness of achieving the objective or how well the objective has been accomplished.
PERS - Public Employees Retirement System. - A pension plan administered by the State of California for government agencies.
Personnel Expenditures - Salaries and wages paid to employees.
Program Revenues – Revenues received by a department as a result of the services or operations of that department (such as user fees), which are used to finance the related services or programs. Program Revenue is not discretionary (general-purpose) revenue.
Property Tax – California State Constitution Article XIII A provide that the combined maximum property tax rate on any given property equal 1% of its assessed value unless an additional amount has been approved by voters for special taxes or general obligation bonds. The County assesses properties, bills and collects these property taxes. The County remits the City’s share, including all penalties and interest.
Property Transfer Tax – This tax is levied at a rate of $1.50 per $100 of the value of consideration of equity value transferred. The County collects the tax and the City receives the revenues. The City can use up to one third of the revenue for seismic retrofits. Revenues are dependent on how frequently the property is transferred and on the accrued value at the time of transfer.
Proposed Budget - The working document for the fiscal year under discussion.
Purchase Order - Authorizes the delivery of specific goods or services, and incurrence of debt for them.
Purpose/Goal - This element explains the need for the activity and the reason for its existence.
Redevelopment Agency Fund - This fund accounts for the activities of the Redevelopment Agency of the City, which was created by the City Council and carry out redevelopment plans for designated areas of the City.
Refuse Fund – This fund accounts for the revenues and expenses related to refuse collection and solid waste disposal services.
Repairs and Maintenance - Expenditures for repairs and maintenance of all equipment and supplies, buildings, structures and grounds.
Reserve - An account used to earmark a portion of the fund balance as legally segregated for a specific use.
Resolution - A special order of the City Council that requires less legal formality than an ordinance in terms of public notice and the number of public readings prior to approval.
Restricted Use Funds – Funds designated for use for a specific purpose.
Revenue Bonds - A type of bond usually issued to construct facilities. The bonds are repaid from revenue produced by the operation of those facilities.
Revenues - Amounts estimated to be available for appropriation during the fiscal year. Included are carry-over balances and new revenues.
Salary Savings - That percentage or dollar amount of salaries which can be expected to be unspent during the fiscal year due to vacancies and employees receiving less than the top-step pay of the classification.
Sales Tax - The City receives one percent of the 8.75% of taxes assessed on retail sales or leases of tangible personal property in the City.
Secured Taxes - Taxes levied on real properties in the City which are "secured" by liens on the properties.
Service Level – Indicates a project’s effect on existing levels of service provision or identifies a new service to be provided to the public.
Special Assessment Fund - A fund used to account for the financing of public improvements or services deemed to benefit primarily the properties against which special assessments are levied.
Special District - Independent unit of local government generally organized to perform a single function.
Specialized Services - Services that are not otherwise categorized, such as title searches, police work for private parties, consultant fees, library materials, fringe benefits and loans.
Spending Limitation (Gann Limit) – Article XIII B of the California Constitution establishes a spending limitation on government agencies within California. The spending limit is a mandated calculation of how much the City is allowed to expend in one fiscal year. The amounts of appropriations subject to the limit are budgeted proceeds of taxes. The total of these budgeted revenues cannot exceed the total appropriations limit. Annually, local governments may increase the appropriate limit by a factor comprised of the change in population combined with the California inflation rate as determined by the State Finance Department.
Structural Deficit: The amount by which a government’s spending is more than it receives in taxes in a particular period, whether the economy is performing well or not. Structural deficit issues can only be addressed by explicit and direct government policies: reducing spending, increasing the tax base, and/or increasing tax rates. It can be described as more "chronic" or long-term in nature hence needing government action to remove it.
Supplemental Assessment- An assessment of real property occurring after the real property lien date of January 1st of each year as a result of new construction or a change in ownership. The assessor determines the new value of the property based on current market values, and then calculates the difference between the new value and the old value set on January 1st.
Tax Levy - Amount of tax dollars raised by the imposition of the tax rate on the assessed valuation of property.
Tax Rate - The amount of tax levied for each $100 of assessed valuation.
Transient Occupancy Tax - A 12% tax is levied on charges for occupancy of hotel and motel rooms for stays of 30 days or less. The City’s lodging industry is largely dedicated to serving its industrial base.
Transportation - Transportation and travel-related expenses incurred in the performance of official City business.
Unfunded (Supplemental) Requests - An item for which funding is not included by the City Administrator due to financial limitations, not because the request lacks merit. The Council may act to include them in the final budget, which may require reordering of budget priorities.
Utility Users Tax – A 7.5% tax is levied on utility billings for gas and electric and intra-state telephone services.
Year-End – This terms means as of June 30th (end of the fiscal year).
If you have any questions, please contact Teresa Berkeley-Simmons, Budget Manager, at (510) 981-7000, or e-mail her at TBerkeley@CityofBerkeley.info