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Louisville, total expenditures in 1993 may increase 9.46 percent over 1992 expenditures. This is based on a rate of growth in Louisville of 6.06 percent and an inflation rate of 3.4 percent. Under Amendment One, the City must also have voter approval to spend in excess of the 9.46 percent fiscal spending base, and any revenue increases that may provide revenues that exceed this spending base must also receive voter approval or must be refunded to Louisville citizens. The City also adjusted its property tax mill levy rate from 5.898 mills in 1992 to 5.862 mills in 1993 according to Amendment One provisions which require that annual property tax revenue changes be restricted to the same growth rate applicable to the City's general spending of 9.46 percent. Because the amendment restricts and holds property tax revenue to the amount in the prior year, in order to comply with the amendment it was necessary to actually reduce the mill levy. Amendment One also requires that local governments reserve one percent of total expenditures for emergencies in 1993; two percent in 1994; and three percent in 1995 and years thereafter. The definition of an "emergency" under the amendment is restricted to natural events, but excludes "economic conditions, revenue shortfalls, or district Mary or fringe benefit increases." Accordingly, the City reserved approximately $165,000 of the total 1993 Budget for emergencies. Amendment One excludes activities or funds considered to be "enterprises". The classification of an "enterprise" under Amendment One is based on three criteria: (1) the entity be considered a government owned business; (2) the entity be authorized to issue its own revenue bonds; (3) the entity receive under 10 percent of its annual revenue in grants from all Colorado State and local governments combined. Because of the present legal uncertainty of the "enterprises' provision of Amendment One, the City's 1993 Budget represents the inclusion of the City's Water Fund, Sewer Fund, and Golf Course Fund within the 1993 Budget and not set aside as "enterprises." BUDGET OVERVIEW The 1993 Budget provides for the total scope of City operations including services, debt service payments and capital improvements. The total 1993 Budget is based on projected revenues of $29,181,305 and projected expenditures of $29,181,305. The modified accrual basis of accounting is used by all governmental fund types and agency funds. Under the modified accrual basis, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. The accrual basis of accounting is utilized by proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. ii