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Budget Preparation Procedures for Cities and Towns

This is a step-by-step overview of the required budget procedures along with tips and recommendations for an effective process. For deadlines related to the budget process, see the budget calendar.

Statutory References

Budget requirements for cities under 300,000 population, and towns are listed in chapter 35.33 RCW, for code cities in chapter 35A.33 RCW, and for cities over 300,000 population (Seattle) in chapter 35.32A RCW.

Chapter 35.34 RCW and 35A.34 contain the provisions for a biennial budget. Thus far, a small percentage of cities are using the two-year budget process. All the dates are the same with the exception of a mid-biennial review and modification.

The roles of the budget makers can vary depending upon the municipality. For example, RCW 35.33.031 states in part that "the clerk shall notify in writing the head of each department of a city or town to file with the clerk," however, the title of "clerk" may be the clerk-treasurer or the finance director in your municipality. RCW 35.33.011(2) defines "clerk" as "the officer performing the functions of a finance or budget director, comptroller, auditor, or by whatever title he or she may be known in any city or town." The guidelines and procedures posted here will reflect the statutory language.

1. Clerk Requests Revenue and Expenditure Estimates (Call to Budget)

Statutory Deadline: On or before the second Monday in September or at such time as the city or town may provide by ordinance or charter.

The budget process begins when the clerk requests all department heads and those in charge of municipal offices to prepare detailed estimates of the probable revenue from sources other than ad valorem (property) taxation and of all expenditures required by his or her department for the next fiscal year (calendar year).

The clerk is responsible for preparing the estimates for interest and debt redemption requirements and all other estimates not being prepared by the department heads (RCW 35.33.031 and 35A.33.030) including the amount to be raised by ad valorem taxes and unencumbered fund balances estimated to be available at year end.

Practice Tip: Budget proposals are made up of estimates and predictions about the future that are based on historical data and trends. Historical sales tax and property tax data can be obtained by going to the state Department of Revenue website or by going to the Local Government Financial Reporting System maintained by the State Auditor’s Office. To help with evaluating the data, the GFOA provides guidance in the form of best practice articles such as Financial Forecasting in the Budget Preparation Process. See Sample Call Letter.

2. Estimates Are Filed with Clerk

Statutory Deadline: On or before the fourth Monday in September or at such time as the city or town may provide by ordinance or charter.

Within fourteen days of the call to budget (unless your jurisdiction has established a separate timeline) all department heads and program managers must file their estimates of revenue and expenditures for their programs and/or departments with the clerk. See RCW 35.33.031 and 35A.33.030.

Practice Tip: It is important to provide staff with guidelines that clearly identify the budget goals, objectives, and any limitations on expenditure requests that may be applicable. A budget information form that assists staff in providing estimates consistent with objectives will extract the budget content desired.

3. Estimates Presented to the Chief Administrative Officer (CAO)

Statutory Deadline: On or before the first business day in the third month (October) prior to beginning of the fiscal year.

Upon receipt of the estimates prepared by department heads and program managers, the clerk must submit the proposed preliminary budget to the CAO (mayor/city manager/city administrator). The preliminary budget should set forth the complete financial program, showing expenditures requested by each department and the proposed sources of revenue by which those programs will be financed. The CAO then may make modifications, revisions, or additions as they see fit. See RCW 35.33.051 and 35A.33.050.

The RCW additionally requires that the revenue and expenditure sections be presented for each fund in a comparative form that will display the actuals for the last fiscal year, the estimates for the current fiscal year, and the budget projections for the ensuing fiscal year.

The revenue section must include the amount to be raised from property tax levies and unencumbered fund balances estimated to be available at the close of the current fiscal year. The expenditures must include a salary or salary range for each office, position or job classification. Salaries may be set out in total amounts under each department if a detailed schedule of such salaries and positions are attached to and made a part of the budget document.

4. Revenue Estimates – Amount to Be Raised by Ad Valorem Taxes to Legislative Body

Statutory Deadline: No later than the first Monday in October.

Once the CAO has approved the preliminary budget, making modifications as necessary, they present it to the legislative body along with current information on estimates of revenues from all sources as adopted in the budget for the current year. See RCW 35.33.135 and 35A.33.135.

The legislative body must hold a public hearing (see below) on revenue sources for the coming year’s budget, including consideration of possible increases in property tax revenues. See RCW 84.55.120.

Practice Tip: The city or town must set by ordinance the amount to be raised by ad valorem tax. If the city or town wants to increase its levy amount as allowed by law or bank its levy capacity, the legislative body must adopt a resolution or ordinance stating the increase in terms of both dollars and percentage. If the percentage is less than the lawful limit the remainder will be banked unless the implicit price deflator  is lower than 1%. See our property tax page for additional information.

5. Preliminary Budget Filed with Clerk

Statutory Deadline: At least 60 days before the ensuing fiscal year. See RCW 35.33.055 and 35A.33.052.

The CAO prepares preliminary budget in detail, making any revisions or additions to the reports of the department heads deemed advisable. Once this is filed with the clerk, it is considered the recommended final budget.

Practice Tip: Preparing a balanced budget is one of the most challenging tasks for the CAO. Articles such as The Economy is Better – So Why is My Budget So Hard to Balance?, by Mike Bailey, Redmond Finance Director, and Achieving a Structurally Balanced Budget, a GFOA Best Practice guide, will provide some insight to assist with the preparation.

6. Preliminary Budget and Budget Message Filed With Legislative Body

Statutory Deadline: At least 60 days before the beginning of the next fiscal year.

The budget message is both a required element (RCW 35.33.057 and 35A.33.055) of the budget and key component of communicating the budget program and objectives. The RCW requires that the budget message contain the following key points:

  • An explanation of the budget document.
  • An outline of the recommended financial policies and programs of the city for the ensuing fiscal year.
  • A statement of the relation of the recommended appropriation to such policies and programs.
  • A statement of the reason for salient changes from the previous year in appropriation and revenue items.
  • An explanation for any recommended major changes in financial policy.
  • See MRSC's Sample Budget Message.

7. Public Notice of Budget Hearings

Statutory Deadline: No later than the first two weeks in November.

The clerk publishes notice that the preliminary budget has been filed and publishes a notice of public hearing on final budget once a week for two consecutive weeks. See RCW 35.33.061 and 35A.33.060.

Public notice is required for each public hearing that must be held during the budget process. A public hearing and notice will be required for the setting of ad valorem tax under RCW 84.55.120 as well as the preliminary hearing requirements found in RCW 35.33.057 and 35A.33.055.

8. Preliminary Budget Available to Public

Statutory Deadline: No later than six weeks before January 1st.

Clerk makes copies of the budget available to the public. See RCW 35.33.055 and 35A.33.052.

Practice Tip: There are many different ways of communicating budget information. While the full budget document may be useful for the legislative body, simpler, more engaging versions that balance text and numbers with simple graphs, are a better way of helping the public understand the budget story. Budget-At-A-Glance documents are a popular tool that cities and towns use. Recently, some cities have started experimenting with online budget portals. See our Communicating About Government Spending for ideas and examples.

9. Public Hearings on Budget

Statutory Deadlines:

  • Ad Valorem Tax Must be done prior to the adoption of the ad valorem tax and certification, which is November 30th (RCW 84.52.070). The legislative body must hold a public hearing on revenue sources for the coming year's budget (RCW 84.55.120), including consideration of possible increases in property tax revenues. After the hearing, a city may choose to pass an ordinance at the same meeting authorizing a property tax increase in terms of dollars and percent to comply with Referendum 47.
  • Preliminary Hearings – A preliminary hearing must be scheduled prior to a final budget hearing, which must be on or before the first Monday of December. The legislative body, or a committee thereof, must schedule hearings on the budget or parts of the budget and may require the presence of department heads. See RCW 35.33.057 and 35A.33.055.
  • Final Budget Hearing – Must be on or before the first Monday of December, and may be continued from day-to-day, but no later than the 25th day prior to the next fiscal year (December 7th).

Practice Tip: The number of public hearings held during the budget process may vary depending upon local policy, or procedure. At a minimum there should be three hearings, as reflected above. See our tips for a successful public hearing for more information.

10. Budget Adopted

Statutory Deadline: Following the public hearing and prior to the beginning of the ensuing fiscal year.

The legislative body adopts budget for the ensuing year following the final public hearing and prior to the beginning of the next calendar year. See RCW 35.33.075 and 35A.33.075.

Practice Tip: The budget ordinance can take on many forms depending upon whether your jurisdiction adopts at the fund level or department level, or includes the ending fund balance or displays appropriations separately from the ending fund balance. The budget ordinance format adopted by the city or town should be consistent with the detailed budget document approved by the legislative body.

11. Copy of the Final Budget to Be Transmitted

Statutory Deadline:  None, but recommended immediately following adoption.

Copies of the final budget should be transmitted to MRSC - send an electronic document or a web link to Gabrielle Nicas. (It is a statutory requirement to submit all adopted budgets to AWC - see RCW 35.33.075 and 35A.33.075 - but AWC has asked MRSC to be the recipient of those documents.)

Code cities must additionally transmit to the State Auditor's Office. See RCW 35A.33.075

Last Modified: March 14, 2017