For cities and towns that begin their fiscal year on July 1, January marks the midpoint of their budget year. That means January is the right time to conduct a thorough budget review.
A mid-fiscal-year review alerts city officials of any budget adjustments:
- Council gets the chance to assess the accuracy of the revenue projections and expenditure estimates that were included in the budget.
- Officials are able to evaluate if adequate resources are provided in the budget to reach the council's goals.
- Council has the opportunity to make adjustments to the budget if needed.
In most cases, council should expect that half (or less than half) of budgeted regular and fixed expenditures have been made at the midpoint. The same for regularly collected revenue, such as utility payments and hospitality taxes. Expect revenues for property taxes, business license taxes and other major sources of revenue to be low at midyear because payments are due in the third and fourth quarter of a fiscal year that begins on July 1.
The midpoint of the fiscal year typically provides council with enough data to identify trends that may call for adjustments. For example, a change in the cost of energy or the price of fuel for one month may not reveal a trend. But six months of increases or decreases may help inform budget modifications.
A midyear budget review also gives council a chance to evaluate the city's finances. Is the budget allowing the city to reach its goals? Can those goals still be met by the fiscal year's end?
What if the midyear review signals the need for spending changes?
Council must adopt a revised budget ordinance in order to amend the annual budget. That ordinance must be read no less than twice, with each reading separated by at least six days. If a city has established a procedure for adopting ordinances that requires additional readings, then council should follow this procedure.
Council should conduct a public hearing on the revised budget ordinance before adoption. The city should advertise the hearing the same way that notice was provided for the budget public hearing, as required by SC Code of Law Section 6-1-80.