Whether it’s your first budget season, or you’re a budget professional, it can feel like you’ve been placed into a conversation where everyone already knows what they’re talking about. Even if you’re somewhat familiar, it seems impossible to retain the all the terms, jargon, acronyms and other hard-to-understand budget words!
Accrual Basis: The basis of accounting under which transactions are recognized when they occur, regardless of the timing of related cash flows. Enterprise Funds and Internal Service Funds use the accrual basis. Other Pierce County funds use a modified accrual basis under which expenditures, other than accrued interest on general long-term debt, are recorded when incurred. Revenues are recorded in the accounting period when measurable and available. Revenues such as interest earnings on investments, rents, interfund payments for services, and payments from other governmental units are measurable and are recorded when earned. However, revenues derived from taxes, license and permit fees, and fines and forfeits are not always measurable and available, and are thus recognized only when the cash is received.
Annual Budget: A plan of financial operation for a given period which outlines the estimated expenditures to provide services or accomplish a purpose together with the estimated revenues which will finance those expenditures. The annual budget includes the estimated cost of operations, debt service, and capital outlay for all operating funds. Budgets must be balanced so that estimated total expenditures equal estimated total revenues. Once adopted by the County Council, the fund totals appropriated become maximum spending limits. Legal authority and requirements for Pierce County’s operating budget are found in the Revised Code of Washington (RCW 35A.33).
Appropriation: A legal authorization granted by the County Council to make expenditures and to incur obligations for specific purposes. For budgetary/operating funds these appropriations lapse at the end of each calendar year. For capital project funds the appropriations do not lapse but continue in force until fully expended or the purpose for which they were issued or established has been accomplished or abandoned.
Assessed Valuation: The fair market value of both real (land and buildings) and personal property as determined by the Assessor-Treasurer’s Office for the purpose of establishing property taxes.
Assets: Tangible and intangible resources owned or held by the government which have probable future economic benefit, including cash, investments, receivables, inventories, equipment, fixtures, and buildings.
Balanced Budget: A budget where planned expenses do not exceed the amount of revenue or funding available.
Bond: A written promise to pay (debt) a specified sum of money (called principal or face value) at a specified future date (called the maturity date(s)) along with periodic interest paid at a specified percentage of the bond issue to which it is related. Some common types of bonds include:
Revenue Bond This type of bond is backed only by the revenues from a specific enterprise orproject such as a utility district.
Special Assessment Bond A special type of municipal bond used to finance a development project.Interest owed to lenders is paid by taxes levied on the property benefiting from the particular bondfundedproject.
General Obligation (GO) Bond This type of bond is backed by the full faith, credit, and taxing power of the government.
Budget Ratios: Quantitative measures, such as the extent to which growth in real (inflation adjusted) resources has kept pace with service demands, used to show budget-related trends.
Budgetary Control: The control or management of a government or enterprise in accordance with an approved budget for the purpose of keeping expenditures within the limitations of available appropriations and available resources.
Capital Improvement Plan (CIP): The long term, six-year plan for capital expenditures for public facilities and infrastructure (buildings, roads, major renovations, etc.). The CIP is a plan of work and proposed expenditures.Only expenditures and revenues proposed for the first year of a project are incorporated into the annual budget.
Cash Basis: The method of accounting under which transactions are recognized only when cash changes hands.
Cost Accounting: Method of accounting which identifies and records all costs incurred to carry out aparticular activity or to deliver a particular service.
Cost Allocation Plan: Employed to distribute central service costs which are incurred when providing common purpose services benefiting more than one cost objective, and not readily assigned to the cost objectives specifically benefited. These costs are considered "indirect." In Pierce County, these indirect cost service areas or "cost centers" include Fiduciary, Human Resources, Legal, and General Management. All of these cost centers are within the General Fund. Pierce County prepares two separate Countywide Central Service Cost Allocation Plans, the 2CFR PART 225 Plan and the Full Cost Plan.
Deficit: (1) The excess of liabilities of a fund over its assets (see Fund Balance). (2) The excess of expenditures over revenues during a single accounting period; or, in the case of enterprise and internal service funds, the excess of expenses over revenues and non-operating revenues (expenses) during an accounting period.
Depreciation: (1) The portion of the cost of a fixed asset which is charged as an expense during a particular period, or (2) the expiration in the service life of fixed assets attributable to wear and tear, deterioration, or obsolescence.
Encumbrances: Obligations in the form of purchase orders, contracts, or salary commitments which are chargeable to an appropriation and for which a part of the appropriation is reserved. The encumbrance ceases when the obligation is paid or accrued.
Enterprise Funds: Used to report the same functions presented as business-type activities in the government wide financial statements. Examples are the sewer utility, Chambers Creek Regional Park, solid waste management, airport, and ferry services.
Entity: The basic financial reporting unit, such as a fund.
Executive Strategic Objectives: These objectives guide the County in the development of department budgets and performance measures.
Expenditure: The payment for goods and services. Expenditures are recorded when the cost of goods or aservice is rendered or a liability is incurred.
Expenses: Expenses represent the total cost of operations during a period, including depreciation and amortization.
Fiduciary Funds: Resources held for the benefit of parties outside the government and are not available to support County programs.
Fiscal Year: A twelve-month period designated as the operating year by an entity. For Pierce County, the fiscal year is the same as the calendar year.
Fund Balance: In general, the fund balance is the excess of an entity’s assets over liabilities and includes those revenues not required for expenditure in the current budget year. Restricted fund balances are those revenues reserved for a specific future purpose. In enterprise and internal service funds the term “unrestricted net assets” is used to refer to the fund balance.
General Fund: Receives unrestricted County revenue which is used to finance activities such as law enforcement, detention facilities, the judicial system, parks, recreation programs, and general governmental services.
Governmental Funds: Consists of the General, Special Revenue, Debt Service, and Capital Project Funds and are governed by accounting standards developed specifically for government.
Grant: A contribution of assets (usually cash) by a governmental unit or other organization to another governmental unit. Typically, grants are made to local governments from the state or federal government for specified purposes.
Interfund Services/Revenue: Interfund services are transactions between individual funds of Pierce County, as opposed to transactions between the County and private vendors or other governments. Internal service funds are the primary providers of interfund services and receive revenues from other County funds for these services.
IT Cost Allocation: A cost model for building and maintaining information systems. This model relates approved investments and Information Technology (IT) costs, and provides detailed cost information, the equitable funding of shared systems, and the ability to audit expenses.
Liability: Debt or other legal obligations arising out of transactions in the past which must be liquidated, renewed, or refunded at some future date.
Major Funds: Funds that have at least 10% of total governmental or enterprise expenditures or have at least 5% total expenditures for governmental and enterprise funds. Pierce County has three major funds, General,Road, and Sewer.
Maturities: A specific time when an investment or a debt instrument becomes due.
Operating Revenue: Sources of revenue received during a fiscal year such as taxes, intergovernmental revenues, license and permit fees, fines and forfeits, charges for services, and grants and contributions.
Operating Transfer In/Out: Authorized transfers from one fund to another fund to support operations of the receiving fund.
An authoritative decree or direction. A law set forth by a governmental authority; specifically : a municipal regulation.
Other Funding Sources: Revenue sources other than operating revenues, such as operating transfers from other departments, sale of fixed assets, interfund loans, bond proceeds, contributed capital, and estimated use of beginning fund balance.
Performance Measures: Measures are developed for each departmental budget. These measures are specific and quantifiable statements of what major items will be accomplished in this fiscal year (see Executive Strategic Objectives).
Property Tax Levy: The amount of property tax allowable under state law which a county government may levy annually without approval by a vote of the county’s registered voters. State law fixes the maximum levy in dollars per $1,000 of assessed valuation and the annual rate at which total regular levy property taxes may increase.
Reserve: An account used to indicate that a portion of fund equity is legally restricted for a specific purpose or not available for appropriation and subsequent spending.
Resolution: A formal expression of opinion, will, or intent voted by an official body or assembled group.
Resources: Total dollars available for appropriation, including estimated operating revenues, interfund transfers, and other financing sources, such as the sale of fixed assets, contributed capital, and estimated use of beginning fund balance.
Subsidiary Ledger: A group of accounts, all of which pertain to one company or activity.
Trust Fund: A fund managed on behalf of another comprised of a variety of assets intended to provide benefits to an individual or organization.
Working Capital (Advance): Funds provided to cover payments that may arise in the future, or to guarantee performance of a contract or service.
Workload Service Data: Specific quantitative measures of work performed or results achieved through anactivity or program.