KIMBALL, Tenn.-Before approving the budget for the 2011-12 fiscal year, Kimball leaders had to pass three new policies governing the management of municipal funds.
Kimball Attorney Billy Gouger said the policy changes are a new requirement that the state has mandated, and they must be in place before June 30.
The policies oversee revenue recognition, fund balance usage and expense prioritization, officials said.
The revenue recognition and fund balance policies can be complicated, Gouger said, but they basically set up "what you're allowed to do with allocated money and the fund balance, as well as what your limitations and controls are."
Gouger said expense prioritization requires the town to spend restricted funds before spending any unrestricted funds.
"Restricted funds are basically the special revenue funds like the sewer fund," he said. "Before you pull money out of public funds to cover expenses that are incurred in a special revenue fund, it requires that you exhaust the special revenue fund."
Gouger said he believes Kimball will be able to comply with all the requirements the new policies present.
"[Kimball personnel] spent a great deal of time last month talking with the local finance people in Nashville to get the budget in the format that they required," he said. "That format is essentially geared towards these new policies."
The board unanimously adopted the policies, which will remain in place without having to be reapproved each year.
Kimball Mayor David Jackson said if the new policies were not passed by the board, the city's 2011-12 budget would not be approved by the state.
"From a legal standpoint, I don't see where the board has much of a choice but to adopt these policy changes," Gouger said.
Ryan Lewis is based in Marion County. Contact him at email@example.com