It’s annual budget season in Bangor, Maine. The process is straight forward: City Manager presents the City Council with a proposed budget, and City Council questions it on a department-by-department basis and haggles it down. City Council eventually reaches a place by the beginning of June where they’re happy with the budget and they approve it, just before the June 30th deadline.
What happens if City Council fails to approve a budget by June 30th?
Per the city of Bangor’s Charter, if City Council fails to approve a budget before the June 30th annual deadline, the City Manger’s originally proposed budget is automatically adopted.
Does City Council deliberate the budget publicly?
Yes. In fact, they are required to deliberate publicly per Maine law. You can either attend in person, or view the meeting on the city’s YouTube channel. You can see the schedule of meetings, their location, and the agendas on the city’s website. Remember, you can also contact City Council to share your feelings about the Council’s priorities.
What is the “Unassigned Fund”?
The city of Bangor is required to set aside funds for an unassigned fund balance. This is money not assigned for any particular purpose and acts as the city’s “rainy day” fund. Over the years extra expenses have popped up and the City Council uses funds from this unassigned balance to cover those unexpected expenditures.
The City Council shall target an unassigned fund balance of no more than 16.66% of the operating budget for the General Fund. The target balance shall be established at 8.33% of the last year’s General Fund operating budget.
Art. VIII. Sec. 16: Unassigned Fund Balance.
Who decides the budget for the Bangor School Department?
The Bangor School Committee decides on the budget for Bangor Schools. Per Bangor’s Charter, the City Council must make one gross appropriation for the funds the School Committee has requested for their budget.
What if City Council disagrees with the School Committee’s proposed School Budget?
City Council is handcuffed here by the City Charter. City Council can certainly ask the School Committee to re-visit their budget and look for potential cuts, but School Committee is under no obligation to do so.
Bangor City Council could refuse to approve the entirety of the city’s budget, but that would be cutting off their nose to spite their face. As mentioned earlier, if City Council fails to approve the city’s budget by June 30th, the City Manager’s proposed budget would automatically be adopted, which includes the School Committee’s budget.
What is a fiscal year and how does it differ from a calendar year?
A calendar year is always January 1st to December 31st, while a fiscal year is any 12-month period a business chooses for accounting.
Because Bangor elects new City Councilors each November, following a calendar year for financing would be a disaster. It would be extremely difficult to seat new councilors and then thrusting them into a budget approval process that would have to be completed in a month from being sworn in. Not to mention there are three major holidays that take place in that time frame.
The City of Bangor has selected June 30th as the end of their fiscal year. That gives the city the flexibility to properly consider their budget.
This year the city of Bangor is considering the budget for fiscal year 2025. That means these decisions will affect funding for city functions from July 1, 2024 through June 30, 2025. When speaking about a fiscal year, it’s always identified as the calendar year in which it ends. Fiscal year can also be abbreviated as “FY”. Currently we’re in FY 2024. July 1, 2024 will begin FY 2025.
How does the City’s Certified Annual Financial Report factor into the next fiscal year’s budget?
Per Bangor’s Charter the City Manager is required to: “Prepare and present to the Council an annual report of the City’s affairs and such other reports as the Council shall require.” The report is typically delivered in December, following the close of the fiscal year. (i.e. the report for FY 2020 was presented on December 28, 2020.)
The City Council uses these information to see how previous budgets played out vs the actual revenues and expenditures and helps them make solid decisions on the next fiscal year’s budget.
Here’s how these reports help City Council during the budgeting process:
Trends and Patterns: The report shows actual income and spending of the past year. This highlights trends in revenue sources (like tax collection) and expenditure categories (such as salaries or infrastructure costs). Recognizing these trends helps the council predict income and costs more accurately for upcoming budgets.
Unexpected Issues: The report may uncover areas where costs significantly exceeded the budget or where revenue fell short. This helps the council pinpoint potential weaknesses and adjust the future budget for more realistic projections or to address problem areas.
Comparisons: Comparing several past annual reports shows how the city’s financial situation changes over time. This is important for long-term planning to determine if the city is becoming financially stronger or if there are developing concerns.
Benchmarking: The report provides a snapshot of the city’s financial health at a particular point in time. This can be compared to previous years or other cities of similar size to see how the city is performing financially.
Note: FY 2025 is the first budget in Bangor’s history (since Annual Reports were required by our charter) that an annual report was not presented to the City Council prior to the proposed budget.
What’s the difference between an Annual Report and a Comprehensive Annual Financial Report?
As stated above, the city’s Charter requires an “Annual Report” to be prepared and presented. Originally these reports would read like a yearbook, giving residents insight on what each department of the city government has been up to for the past fiscal year. (You can see the Bangor Public Library’s beautiful online collection of past Annual Reports for the City of Bangor by clicking here.) The city would also put out an Annual Financial Report along side the traditional Annual Report. The Financial report would contain the city’s audit and balance sheets. (Here’s a financial report from 1955.)
In the years since, the city of Bangor has stopped creating and distributing an Annual Report and has opted to only make a Comprehensive Annual Financial Report available. This is more than sufficient for budgeting, but for Bangor citizens the traditional Annual Report was far more informative.
