What’s on Your Agency’s Year-End Financial Checklist?

Most local governments are currently focused on creating and adopting their budget for the upcoming year. As the last few months of the year are sure to fly by, it is important to prepare for some year-end deadlines.

Monitor Current Budget for Possible Budget Amendments

It seems like a couple of months into each new year MRSC receives at least one inquiry from a local government that has realized it exceeded the budget appropriations for the previous year and wants to know what can be done about this. The short answer is nothing: The last day a local government can amend its budget is December 31 of that budget year.

It is important to start carefully examining current agency expenditures in October and communicating with budget managers about any large, outstanding purchases or project billings throughout the remainder of the year. You do not want to be caught off guard with expenditures at year’s end that will put your agency over appropriations.

As a reminder, cities are required by RCW 35.33.151 and RCW 35A.33.150 (code cities) to have an open period during the first 20 days of January where claims received for the previous year shall be changed to be previous year’s budget. Likewise, RCW 36.40.200 gives counties an open period of 30 or 60 days (as determined by the county auditor) for the same purpose.

New – Report Involuntary Water or Electricity Shutoff due to Extreme Heat

During the 2023 legislative session, HB 1329 was passed preventing involuntary water and electricity shutoffs during extreme heat events (see New Bills Address Utility Connection Charges, Service Disconnection for Non-Payment for more information).

The legislation also requires water utilities with more than 2,500 customers and electric utilities with more than 25,000 customers to complete an annual report with Washington State Department of Commerce (Commerce). This report should include the total number of disconnections that occurred on each day for which the National Weather Service issued or announced that it intended to issue a heat-related alert.

Information can be found on Commerce’s Utility Extreme Heat Shutoff Moratorium webpage, along with links to the reporting portal and a recording and PowerPoint presentation on the reporting process. The report is due to Commerce by October 31, 2024.

Levy Certification due to Counties by November 30

Taxing districts are required to certify their regular property tax levy to their respective county by November 30 of each year.

If you are new to municipal finance in Washington, you do not want to miss this deadline. Under RCW 84.52.070(3), a taxing district that fails to certify its regular property tax levy by November 30 may not receive more than it levied the previous year.

Adopt a Budget by December 31

During every budget season, MRSC will typically receive at least one inquiry asking what happens if the local government does not adopt a budget for the upcoming year. Cities and counties that do not pass a budget will not be allowed to make any expenditures beginning January 1 of the following year, effectively causing them to shut down.

RCW 35.33.170 for cities and RCW 35A.33.160 for code cities provide that city officials — including managers, mayors, and councilmembers — who knowingly making expenditures in excess of budget appropriations “shall be guilty of a misdemeanor and shall be fined not more than five hundred dollars for each separate violation.”

RCW 36.40.130 and RCW 36.40.240 provide similar consequences for county officials, with the latter stating:

Any person violating any of the provisions of this chapter shall be guilty of a misdemeanor and upon conviction thereof shall be fined not less than twenty-five dollars nor more than five hundred dollars.

If a local government has failed to adopt a budget by December 31, any expenditure it makes after this date would be considered in excess of appropriations. Additionally, failure to adopt a budget on time could result in a management letter or finding from the Washington State Auditor’s Office.

If a city, town, or county cannot come to an agreement on a budget or, for some other reason, is unable to prepare a budget in time, there are a couple of options to consider:

1. The governing body could adopt the same budget it adopted the previous year. Note that for cities, the dollar amount for property taxes should be updated to reflect the amount that was certified to their respective county.
2. Another option is to pass a budget appropriating funds necessary for agency operations to continue in the new year. Once this happens, agency leaders can work to iron out additional budget items that caused disagreement in the prior year, and they should do so as soon as possible.

Resources

The above items are by no means an exhaustive list of items that must be completed before the end of the year. I recommend checking out the following MRSC resources:

• 2024 Legal Compliance Calendar for Clerk/Treasurers and Finance Departments
• Introduction to Budgeting

Please reach out to me if you have any questions regarding year end items.