Understanding town government budgets

The Town of Basin is currently working through its annual budget process. I wanted to take a moment to help explain how the budget works and how funds flow through the different parts of Town Government.

There are three main sections to the Town’s budget: Enterprise Funds, the Internal Service Fund, and the General Fund. Each plays a different role in how services are provided and funded.

Enterprise Funds are made up of the services the Town provides directly to customers. These include sewer, raw water, potable water, sanitation (garbage), mosquito control, and electricity. These funds operate much like a business – meaning they are supported by the fees paid by the people who use those services. Each of these departments have significant operating costs. This includes infrastructure such as water and sewer lines, electrical systems, dumpsters, equipment, and vehicles, as well as the manpower required to keep everything running. In addition, the Town purchases bulk water and electricity from outside providers to ensure reliable, high-quality service for our residents.

By state statute and good financial practice, Enterprise Funds are expected to be self-supporting. This means they should cover their own costs and also build reserves for future repairs, replacements, and emergencies – so the Town does not have to rely on borrowing when unexpected issues arise.

The Internal Service Fund supports the day-to-day administrative operations of the Town. This fund is supported by allocations from the Enterprise Funds, with each enterprise fund contributing a portion toward shared costs. These shared costs include items such as insurance, printing, computers, phones, postage, advertising, training, legal and audit services, permitting, website maintenance, as well as services like fire protection.

The General Fund supports services that benefit the community as a whole. These include public safety, such as law enforcement, as well as streets, parks, the cemetery, and general day-to-day operations for the town. Revenue for the General Fund comes from a mix of revenue sources. These typically include local sales and use taxes, property taxes, and distributions shared by the State. Additional revenues can come from franchise fees, licenses and permits, and intergovernmental grants. 

Together, these funding sources allow the Town to provide essential services and meet the needs of Basin residents. In simple terms, the Enterprise Funds are paid for by user fees and support utility services, the Internal Service Fund supports shared administrative and operational costs, and the General Fund is supported by taxes and funds community-wide services.

The goal of the budgeting process is to make sure each of these areas is properly funded so the Town can continue to provide reliable services, maintain infrastructure, and plan for the future – all while being responsible with public funds.

(CJ Duncan in Mayor of the Town of Basin.)