Reviewed Date: 01/03/2023
Annual Reporting Requirements of the State of Tennessee Comptroller of the Treasury - Division of Local Government Finance
The State of Tennessee Comptroller of the Treasury, Division of Local Government Finance, is the agency responsible for oversight of municipal budgets and city-issued debt.
The Division of Local Government Finance requires the submission of an annual budget with certain supporting documents for approval. The annual budget should be on the same basis of accounting as required by generally accepted accounting principles. Supporting documents must contain sufficient information for the state to determine if the city’s budget is balanced and that appropriations are sufficient to meet all expenses of operations and annual debt service requirements. A budget will be considered balanced if beginning cash balances plus revenues are enough to cover the appropriations. The following is a list of example items your city may be required to submit in order to comply with the Local Government Finance requirements. (Refer to the annual memorandum mailed to cities by the Local Government Finance in the spring each year for other specific information required):
- A cover letter on the local government's letterhead that includes contact information for the mayor, city manager if applicable, and one of the following: finance director, city recorder, CMFO, or equivalent position.
- A copy of your annual operating and capital budget ordinance after adoption. This should be a certified copy.
- A certified copy of your tax levy ordinance (if separate from the budget ordinance).
- Your detailed annual operating budget after passage. Use a three-column format showing last year’s actual figures from the audit report, this year’s projected data, and the next year’s proposed budget. This should include detailed revenues, expenses/expenditures, and beginning and ending cash balances. All funds, including enterprise funds, must be included. Enterprise Fund budgets should be prepared on the accrual basis of accounting and reconciled to the cash basis.&For these enterprise funds, the reconciliation should remove any depreciation and amortization, and add debt principal repayments. Interest payments are already properly recorded as an expense. This converts your accrual-based budget to a cash basis budget.
- A copy of the annual adopted budget for any entity that results in a financial benefit or financial burden to your local government. This could be component units, joint ventures, etc.
- A budget summary schedule (format provided by state).
- A schedule of outstanding debt and a schedule of budgeted debt payments by fund (formats provided by state). These two schedules should be reconciled to each other.
- Revenue projections for property tax and sales tax, if applicable. For property taxes, calculate the projected revenue by multiplying the assessed value by your property tax rate, and then dividing the total by $100. Include this information as a schedule that you send to the state.
- A statement of cash flow analysis for any fund that received tax/revenue anticipation notes.
- A statement of cash flow will be required for operating funds with a budgeted cash balance or an actual prior year ending cash balance that is less than 15% of annual expenditures.
- A copy of your capital budget if you have one. Except for general law modified city manager-council charter cities, there is no requirement to produce a capital budget. You should notify the state if you do not have one so that the budget approval process will not be slowed by the Local Government Finance staff looking for something that does not exist.
- A SRF loan covenant and Water Wastewater Financing Board worksheet, if applicable.
- A city with a school system must submit the balanced school budget. These requirements are only for the Local Government Finance, other agencies may require separate reporting. Be sure that the city's appropriated expenditure for the school system matches the revenue listed in the school system's budget. If the school system has outstanding debt, the above mentioned debt schedules should be included for the school system also.
These are the basic requirements. Local Government Finance may ask for additional details or schedules. As you might imagine, this is serious business, and budgets that don’t balance or that are without sufficient detail for analysis will slow the approval of your budget.
The Tennessee Debt Manual for Local Governments was issued by Local Government Finance in June 2021. The manual provides general guidance, procedures and specific forms to be used by local governments issuing debt. The Debt Manual contains specific guidance on issuing and refunding debt transactions and should be used to assist debt issuers comply with state law.
Local governments that issues debt must report the indebtedness to Local Government Finance. This is done using the Comptroller’s Form CT-0253: Report on Debt Obligation which is required to be filed by the local government within 45 days of signing any debt obligation.
For more information
State of Tennessee Comptroller of the Treasury
Division of Local Government Finance
Cordell Hull Building
425 Fifth Avenue North
Nashville, Tennessee 37243
Phone: (615) 401-7829