The City maintains a variety of funds and subfunds to account for various revenues and expenditures. The use of multiple funds is necessary to ensure compliance with State budget and accounting rules and to promote accountability for specific projects or activities. Each of the City’s funds and subfunds falls into one of three broad fund categories – Governmental Funds, Proprietary Funds, and Fiduciary Funds. Each of these categories of funds is discussed below.

The Governmental Funds category includes the four fund-types that provide the financing for all of the City’s basic services. These four fund-types are the General Fund, the Special Revenue Funds, the Debt Service Funds, and the Capital Projects Funds.

• The General Fund is the primary operating fund of the City. It accounts for all financial resources except those required to be accounted for in another fund. It derives the majority of its revenues from property, sales, business, and utility taxes.

• Special Revenue Funds account for certain revenues, such as specific taxes and grants, that are legally restricted to be spent for specified purposes. Financing of many of the City’s basic services is accounted for in Special Revenue Funds. For example, parks operations, transportation maintenance and improvements, the City’s libraries, and the Seattle Center all have their own Special Revenue Funds.

• Debt Service Funds account for the accumulation of resources to pay principal, interest, and related costs. Most of the activity in these funds occurs in the General Bond Interest and Redemption Fund, which receives money from excess property tax levies to pay debt service on voter-approved general obligation bonds, and receives money from the General Fund and other funds to pay debt service on councilmanic limited tax general obligation bonds.

• Capital Projects Funds account for financial resources which are designated for the acquisition or construction of general government capital improvements. Examples of Capital Project Funds include the Seattle Center Redevelopment/Parks Community Center Fund, the Transportation Bond Fund, and the Open Space and Trails Fund. For the funds whose projects are financed with City debt, the debt proceeds are deposited in and spent from these funds, and the debt service is paid from the Debt Service Funds.

The Proprietary Funds category includes two fund-types – the Enterprise Funds and the Internal Service Funds.

• Revenues and expenditures of each of the City’s four rate-funded utilities (Light, Water, Drainage and Wastewater, and Solid Waste) flow through an Enterprise Fund. Each utility is financed and operated as a business-like enterprise, which requires periodic determination of revenues earned, expenses incurred, and net income. In addition, a fifth Enterprise Fund was established in 1998 to track revenues and expenses of the new City-owned Downtown Parking Garage.

• Internal Service Funds account for operations that provide goods or services to other City departments or other governments on a cost-reimbursement basis. The City has two Internal Service Funds. The Executive Services Fund accounts for finance, personnel, fleet, facilities, technology, contracting, and budget services to all City departments. The Engineering Services Fund accounts for the design, construction, and management services performed for various capital improvement projects.