2001 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND, INDIANA NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (Continued) F. Budgets The operating budget is initially prepared and approved at the local level. In addition, funds for which property taxes are levied or highway use taxes are received are subject to final approval by the Indiana Department of Local Finance. Budget modifications have been made in accor- dancewith the laws of the State of Indiana. Budgets are adapted on the cash basis which is not consistent with generally accepted account- ing principles. Annual appropriated budgets are adapted for the general fund, thirteen special revenue funds, one debt service fund, eleven capital projects funds, eight enterprise funds, three internal service funds, and two pension trust funds. All annual appropriations lapse at fscal year end. See Note 2 for the legal compliance of the budgetary process and a reconciliation of the Budgetary Non-GAAP}basis to GAAP basis. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, or other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbrances outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the com- mitments will be honored during the subsequent year. G. Gash and Gash Equivalents Cash and cash equivalents include amoun#s in demand deposits as well as short-term invest- ments with a maturity date within three months of the date acquired. H, Investments Nonparticipating certificates of deposit, demand deposits, and similar nonparticipating negotiable instruments that are not reported as cash and cash equivalents are reported as investments at cost. Debt securities are reported at fair value. Debt securities are defined as securities backed by the full faith and credit of the United States Treasury or fully insured or guaranteed by the United States or any United States government agency. Investment income, including changes in the fairvalue of investments, is reported as revenue in the operating statement. Property Taxes Property taxes levied are collected by the County Treasurer and are distributed to the City in June and in December. State statutes SIC 6-1.1-17-15}require the Indiana Department of Local Finance to establish property tax rates and levies by February 15. These rates were based upon the preceding year's March 1 ~Iien date} assessed valuations adjusted far various tax credits. Taxable property is assessed at 33113°/° of the true tax value determined in accor- dancewith rules and regulations adopted by the Indiana Department of Local Finance}. Taxes 17