Budgets are adopted on a basis consistent with generally accepted accounting principles (“GAAP”). Governmental and Fiduciary Funds utilize the modified accrual basis of accounting under which revenues and related assets are recorded when measurable and available to finance operations during the year. Proprietary Funds use the accrual basis of accounting which recognizes revenues when earned and expenses when incurred. Annual operating budgets are adopted for all Governmental Funds except for the Capital Projects Fund in which effective budgetary control is achieved on a project-by-project basis when funding sources become available. All appropriations lapse at year-end, except those for the Capital Projects Fund. It is the intention of the Board of Supervisors that appropriations for capital projects continue until completion of the project.
Fund Structure
The budget of the County is organized on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. The various funds are grouped as follows:
Governmental Funds
Governmental funds are those through which most governmental functions of the County are financed. These include:
General Fund
The General Fund accounts for all revenue and expenditures of the County which are not accounted for in the other funds. Revenues are primarily derived from general property taxes, local sales taxes, license and permit fees, and revenues received from the State for educational purposes. A significant part of General Fund revenues is used to maintain and operate the general government, however, a portion is also transferred to other funds principally to fund debt service requirements and capital projects. Expenditures include, among other things, those for general government, education, public safety, highways and streets, welfare, culture, and recreation.
Special Revenue Fund
Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. These funds account for the resources obtained and used relating to State and Federal Grants, Mental Health and Mental Retardation programs, the Utility Department’s Solid Waste and Street Light operations and the School Cafeteria.
Debt Service Fund
The Debt Service Fund accounts for the accumulation of financial resources for the payment of interest and principal on all governmental fund long-term debt except for accrued compensated absences and capital lease obligations which are paid by the fund incurring such expenditures. Debt Service Fund resources are derived from transfers from the General Fund and Special Revenue Funds.
Capital Projects Fund
The Capital Projects Fund accounts for all general government and school system capital projects which are financed through a combination of proceeds from general obligation bonds and operating transfers from the General Fund.
Proprietary Funds
Proprietary funds account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the County is that the cost of providing services to the general public be financed or recovered through charges to users of such services. These funds include:
Enterprise Funds
These funds account for the operation, maintenance, and construction of the County-owned water and wastewater (sewer) utility, and the County-owned golf course.
Internal Service Fund
An Internal Service Fund accounts for the financing of goods or services provided by one department to other departments of the government on a cost-reimbursement basis. The Internal Service Fund budgets for the County’s Central Automotive Maintenance operations and the new Technology Replacement Fund. Resources for these funds come from interdepartmental charges.
Fiduciary Fund
Fiduciary funds are used if the government has a fiduciary or custodial responsibility for assets.
Agency Fund
The Agency Fund accounts for assets held by the County for the James River Juvenile Detention Commission. All revenue and expenditures related to operations are accounted for in separate sub-funds, operating, debt, and capital. Resources for operations are primarily derived from a transfer from the General Fund and payments from the State and other localities.
Henrico County’s Budget Process
Henrico County’s budget process involves reviews of current County finances, local and regional economic conditions, major program changes, and wage and price levels. The review of current County finances covers such specifics as building permits, tax assessments, business license records, sales taxes as affected by retail sales, and mandatory increases in County government contributions to social security for its employees. The questions that are asked in this review are aimed at acquiring relevant financial information that will set the broad limits of budgetary possibilities. From a policy viewpoint, the basic question is whether current finances support the necessary budgetary outlays.
Each year all County departments receive the County Manager’s “Call for Estimates” (i.e., budget call), which contains the budget policy, special budget instructions, various revisions to the budget manual, a budget calendar, and the target allocation. The Call for Estimates is accompanied by information on using the County’s Automated Budget System, which enables the departments to prepare their budget requests on their departmental personal computers and submit them to the Office of Management and Budget (OMB) electronically. The budget request consists of expenditure estimates in detail by line item, and in summary, together with supporting narrative information.
The Budget Director and the OMB staff prepare the revenue estimates, and work closely with the County Manager and department administrators in reviewing expenditure estimates both in program and financial terms. After the expenditure estimates are analyzed, recommendations for approval or denial are made and presented to the Budget Review Committee, which consists of several key County officials. Representatives from the departments are present at the time of these reviews and have the opportunity to make presentations and answer questions relative to their budget requests. Further review of expenditure estimates is conducted by the County Manager and County Board of Supervisors during the budget cycle.
The budget document that is presented to the County Board of Supervisors represents the culmination of long periods of intensive research and analysis by executive staff in the County. The purpose of the document is to present to the legislative body and the public a comprehensive picture of approved operations for the budget year, expressed in both verbal and statistical terms.
The Code of Virginia requires that the County advertise a synopsis of the budget in the newspaper and that one or more public hearings be held before the Board adopts the budget and sets the tax rates. Also the Code requires that the County Manager submit a balanced budget to the Board of Supervisors. In addition, the School Board must provide its budget by April 1st. The Code of Virginia requires that the Board of Supervisors approve the School Budget no later than May 1 and the General Government Budget by June 30.
The County Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total budgeted amounts and/or appropriations of any fund require an amendment to the budget. The Code of Virginia requires that the Board of Supervisors approve any amendment. If the total amendment requested is greater than 1 percent of the total appropriated amount, the request also must be advertised in the newspaper and a public hearing must be held before the Board can act.
