You might consider the annual operating budget to be the town’s most important work product. It gives Apex town officials the authority to collect revenue and make expenditures, depending on the priorities of the council, staff, and community.
By June 30 each year, the council is required by state law to approve the budget for the coming fiscal year (July 1 - June 30). Staff begins estimating revenues and expenses for the coming year, and seeks public input beginning in January. Generally by May, the Manager has a draft budget complete for Council’s review and public comment.
Typically, the General Fund includes services that cannot be operated as a business enterprise and rely on tax dollars as their primary source of revenue. Most of the town’s General Fund revenues come from ad valorem (property) tax, and State-collected revenue (such as the state sales tax), permits & fees, restricted & unrestricted intergovernmental revenues, fund balance allocation and miscellaneous revenues.
The Town of Apex operates three major funds as enterprises - the Electric Fund, the Water and Sewer Fund, and the Stormwater Fund. Enterprise funds operate similar to a business and are self-sustaining with user rates and fees that generate all revenues to cover expenditures.
All expenditures related to day-to-day operations of the town come from the General Fund. Capital projects, such as the construction of roads, parks, and other public facilities, are also budgeted with General Fund dollars. Any expenses related to the maintenance and operation of water, sewer, and electric services come not from the General Fund, but instead from their respective Utility Funds. The Town’s 22 General Fund departments and divisions can be grouped into the following six primary function areas:
- Public Safety: 37%
- General Government: 16%
- Economic & Physical Development: 12%
- Cultural & Recreation: 11%
- Transportation: 9%
- Debt Service: 9%
- Environmental Protection: 7%
The town’s fund balance is much like a savings account, as compared to a household budget. If the town brings in more revenues than expected or spends less than the budgeted expenditures, then at the end of a budget year these differences, or extra funds, become part of this savings account that constitutes the fund balance.
The North Carolina Local Government Commission requires all North Carolina municipalities to maintain at least 8% of 1 year’s general fund operating expenses in their Fund Balance. The town’s policy is to maintain that ratio at 25% as a minimum. From time to time, the Town will use money from fund balance to cover one-time expenses such as specific capital items. The Town evaluates any decision to use fund balance carefully and often plans the use in advance to ensure adherence to the Town’s fund balance policy.
The FY23-24 Budget includes a fund balance allocation of $4,675,000, including $200,000 for Eva Perry Library repairs, $825,000 for street improvements associated with Felton Grove High School, $300,000 for study and design of the Salem Street Bicycle Connection, $300,000 for design of the Environmental Education Center, $300,000 for greenway studies, $250,000 for street hockey courts, and $1,000,000 for Safe Routes to School projects. An additional $1,500,000 of restricted fund balance will be transferred to the Debt Service Fund for financing associated with the Mason Street Municipal Building for Building Inspections and Permitting.
It is important to maintain a healthy fund balance. Bond Rating Agencies analyze a municipality’s practice of fund balance usage and adherence to their fund balance policy. These agencies have been quite pleased with Apex’s fund balance maintenance:
- Standard and Poor’s rates Apex as AAA (the highest possible rating)
- Moody’s rating is Aaa (the highest possible rating)
These ratings allow the town to borrow money at the most favorable interest rates.