CITY OF GRANTS, N.M. – The charter for the City of Grants is a document which lays out the specifics on how the city can and should operate. The charter opens itself to present the fact that the city exists because of and for the benefit of the people who live inside of it. The charter ensures that the people of the city always have a say in the workings of their government by establishing that amendments or changes to the charter must be passed through election and giving the people the ability to elect their councilors and mayor.
The charter declares itself a restriction on the powers of the government, outlining what the government can do and in what fashion they can do it. So far through our exploration of the charter, we have discovered how and why the council, mayor and manager, and municipal judge exist, and discussed the scope of their work. Together we have explored how the city is able to manage their day-to-day affairs and how and why advisory committees work, along with the departments and divisions that keep the city operating. With all of this in mind, the city needs to find a way to pay for its operations.
ARTICLE VI: FINANCIAL PROCEDURES
Article VI is made up of 11 sections that lay out the specific procedures that the city must follow to keep the public’s money in the public’s view, and to try cut back on wasteful spending.
This article grants a good deal of responsibility to the council. The executive branch of the city’s government is responsible for the administration of the city’s monies, but as we learn in this article, the council is ultimately responsible for allocating that money and addressing budget surpluses and shortfalls as they occur.
Section One: Fiscal Year; Treasurer
This section holds two simple subsections that ensure the management of the finances.
Subsection A declares that the city’s fiscal year will take place from the first day of July, to the last day of June. This means that the city is currently in fiscal year 2020, which began July 1, 2020, and will end June 30, 2021.
Subsection B establishes that the city must have a City Treasurer. However, the city is not required to have an official City Treasurer position; if there is not a person for that position, then the Director of Finance and Accounting will fill the role of treasurer. If the city wishes to have a different person in that position, however, the governing body must pass a resolution to affirm that person as treasurer. This ensures that the mayor and/or city manager cannot just put someone in that position; it also ensures that no member of the council can try and put someone in that position. This subsection is only one sentence long but offers a lot of protections to the citizens of Grants by preventing government overreach and ensuring that the public’s work is done in the public’s view.
Section Two: Recommended Budget and Message; Recommended Capital Program
This section is made up of two subsections that establish four items the manager is required to put forward to the governing body which ensure the city is in line with state budget requirements.
Subsection A establishes that the manager must prepare four items annually: A recommended budget; a recommended budget message; a capital plan; an infrastructure capital improvement plan. These will be explained in the next article.
Subsection B demands that these four items be presented to the governing body no later than the first regularly scheduled meeting of the city council in May.
Section Three: Contents
This section has four subsections which explain what is required in the above-mentioned reports to the council.
Subsection A discusses the proposed budget, which must have a complete financial plan for all the city’s budgets and activities to be undertaken in the coming fiscal year. This subsection offers a clause to allow the manager to present this budget in any form they desire, so long as it is lawful according to the State of New Mexico and within the bounds requested or required by the councilors.
Subsection B explains the manager’s recommended budget message, which must explain why and how the new budget will be used to accomplish the needs of the city, and how it will affect ongoing operations. The message must include any significant changes from the current budget and include information on the current debt situation. The report can include whatever other information the manager thinks is important for the governing body.
Subsection C discusses the infrastructure capital improvement plan, which is a document mandated by the New Mexico Department of Finance and Administration. What the charter demands may not be all that is required of the manager; this series is intended to explore just the charter. With that said, the charter demands that the manager includes five things in the ICIP.
1. A summary of what is inside.
2. A list of the next five years of projects and their costs, along with other information necessary to the public and councilors to understand the true cost of upcoming projects.
3. The estimated cost and time schedule from start to finish for each project.
4. An explanation of how payment will be made for each individual project.
5. The estimated yearly cost of operations and maintenance of each individual project after it has been completed.
Subsection D is a single sentence known as the Yearly Revision Clause, which mandates the city leadership review Subsection C every year, to ensure its fiscal relevancy, but also to ensure that what is on the plan fits with the desires and needs of the public.
Section Four: Governing Body Action on Budget and Capital Program
This section has four subsections that ensure the public is aware of the spending plans and proposed budget of their city, giving them the opportunity to understand the city’s fiscal situation so they can call on their councilors for redress if they are unhappy.
Subsection A is a single sentence known as the Notice and Hearing Clause, which establishes that the city must give the public reasonable notice of the proposed plans and where they can be viewed. This clause also establishes that two weeks after the publication of those proposals, there must be a public hearing to discuss the contents of the plan.
Subsection B allows the council to amend the proposed plans. Firstly, amendments are not required by the charter, and they can be passed without amendment by the governing body. If the councilors decide to amend the proposed plans, they are allowed to change the estimated costs of the projects detailed in the ICIP, however, no change may exceed the estimated income of the city in the proposed budget for the next fiscal year.
Subsection C is another single sentence, known as the Adoption Clause; it mandates that each of the proposed plans will be passed separately, each through a resolution.
Subsection D declares that, if by the beginning of the new fiscal year the city has not passed a budget, all ongoing projects will be paid for on a monthly basis in the amount required by the project. This will continue until the council adopts a budget for the year. This does not allow the city to stop paying its debts or bond payments, as those are required to be paid no matter the financial situation of the city.
Section Six: Appropriation and Revenue Resolutions; Limitation on Taxing Power
This section is constructed by two subsections; it ensures that the city makes clear to the different departments and divisions the amount of money each will have available to spend throughout the fiscal year.
Subsection A demands three things of the council:
1. A resolution must be passed which details the amount of money given to each department or division of the city to complete their work throughout the year.
2. A tax levy resolution must be passed which authorizes the city to impose property taxes and other taxes as allowed under the laws of the State of New Mexico.
3. A resolution or ordinance, whichever is most appropriate, for establishing new sources of income to the city.
Subsection B exists to ensure that the charter cannot be misconstrued as granting tax authority to the city that is outside the scope of the law. This exists as a protection of both the citizens of Grants and the city government, so that the governing body does not impose taxes which would be considered harmful or otherwise inappropriate upon the people they govern.
Article Six: Amendments After Adoption
This section has four subsections, all of which deal with successes and challenges that may arise after the budget has been initially adopted.
Subsection A declares that, in the event there is extra money to be spend, the manager may inform the governing body. The governing body may choose to give extra money to departments and divisions by passing a resolution to detail the amount given, and to which departments it is given, the council may give the full amount of extra monies to the various departments.
Subsection B explains that, in the event there is a budget shortfall and there may not be enough money to pay the full amount to the various departments or divisions, the manager must inform the council immediately. The manager must report to the councilors the amount of the shortfall, and any action the manager has taken to prevent the budget shortfall. The council will then be tasked with finding a way out of the budget deficit, and may reduce, by resolution, the amount of money given to departments or divisions.
Subsection C does two major things. First, it establishes that the governing body may, by means of resolution, move money allocated to one department or division to another department or division. Secondly, it establishes that the manager may move money from programs within a department or division but must inform the governing body in writing of these movements. Meaning, if Department A has Program A and B, but Program B was running out of money, the manager may move money from Program A to B; but couldn’t take money from inside Department A and give it to Department B because that power rests solely with the governing body.
Subsection D limits the city. Even in the event of a budget shortfall, the council nor manager may limit the amount of money already appropriated to pay off the city’s debts.
Section Seven: Lapse of Appropriations
This section is made up of a single paragraph which safeguards the city’s finances.
In order to protect the taxpayer, every previously made appropriation – except those made on the capital plans – will lapse, or end, at the end of the fiscal year. This is why there must be a new budget every year.
Capital improvement plans will only lapse when the project is completed, or changed, or repealed by the governing body. A capital improvement appropriation may also lapse if, after three years, no money has been used to work on the project.
Section Eight: Administration of the Budget
This section is one sentence long; it explains that the budget will be administered through ordinance. This means that any specifics on how the budget will be used must be passed in an ordinance by the governing body.
Section Nine: Prohibition of Overspending of Appropriations
This section is made up of four subsections which is intended to protect the city from overspending.
Subsection A protects the city from overspending. The city is not allowed to make a purchase or order something if they do not have the money, or will not have the money to pay the debt when that debt becomes due.
Subsection B establishes that any purchase that is made in violation of this charter is to be considered void and any payment for those unlawful purchases shall be a violation of the law.
Subsection C declares that any officer of the city who knowingly takes on these debt obligations can be removed from public office, and that officer may be held responsible for the full amount paid by the city during the illegal purchase.
Subsection D does allow leeway for the city to pay for capital plans through the issuance of bonds. It also allows for the city to make contracts and leases, so long as they have been previously provided for by resolution.
Section 10: Independent Audit
This section finalizes the protections from fiscal irresponsibility. This article is comprised of two subsections.
Subsection A demands that the city have an annual financial audit – this means, all of the city’s accounts. The charter is clear that the audit must be completed by at least one Certified Public Accountant or firm of CPAs who have no interest in the ongoings of the city government or individual leaders in the city. Their report must be made directly to the city government.
Subsection B allows, as applicable under state law, for the city to hire an CPA or CPA firm to do the audit.
Section 11: Investments of Funds
Being one paragraph long, the first of the final two clauses of Article VI declare the city’s ability to both deposit and invest its funds into accounts that will offer the highest, most practical interest yield. The second and final clause allows the city to do their banking inside the City of Grants, or outside of the City of Grants, at whichever institution will offer the highest practical yield.
This article is very heavy on ensuring that the executive branch of the city’s government does not have too much power and cannot manage the city’s finances all by themselves. Granting the council what is known as “the power of the purse,” the councilors are responsible for ensuring the city’s finances go where they are most needed. This ensures a close collaboration between the legislative branch of councilors with the executive branch, the city manager.