Glossary of Governmental Finance Terms

Following are explanations of terms used on this website.

Appropriation.  The term “appropriations” means an authorization by a higher authority to expend government money.  Usually, that higher authority is the fiscal body of the unit. 

Assessed value.  Sec. 1.7. "Assessed value" has the meaning set forth in IC 6-1.1-1-3.  IC 36-1-2-1.7

Bonds.  Sec. 2. "Bonds" means any evidences of indebtedness, whether payable from property taxes, revenues, or any other source, but does not include notes or warrants representing temporary loans that are payable out of taxes levied and in the course of collection.  IC 36-1-2-2

Budget.  The term budget is generally used to describe the ordinance adopted each year by the fiscal body to appropriate funds, set levies, and determine property tax rates.  In some contexts, the term “budget” refers in particular to the spending portion of the ordinance. In those contexts, “budget” had the same meaning as “appropriation.” 

CAGIT.  "CAGIT" is a set of initials which stands for "county adjusted gross income tax".  The term is commonly used to refer to a local option income tax that is designed in part to provide property tax relief and also to provide revenue to local civil units.

City.  Sec. 3. "City" refers to a consolidated city or other incorporated city of any class, unless the reference is to a school city.  IC 36-1-2-3

Civil Unit.  "Civil unit" usually refers to a unit of local government other than a school district.

Clerk.  Sec. 4. "Clerk" means:
        (1) clerk of the circuit court, for a county;
        (2) county auditor, for a board of county commissioners or county council;
        (3) clerk of the city-county council, for a consolidated city;
        (4) city clerk, for a second class city;
        (5) clerk-treasurer, for a third class city;
        (6) clerk-treasurer, for a town; or
        (7) chief executive officer of a political subdivision not described in subdivisions (1) through (6).  IC 36-1-2-4

COIT.  "COIT" is a set of initials which stands for "county option income tax".  The term is commonly used to refer to a local option income tax that is designed primarily to provide revenue to local civil units.  It may also be used to provide some property tax relief.

Cumulative fund.  A cumulative fund is a legal and accounting device to track revenue that is restricted for certain capital projects.  They are called “cumulative” because revenue in these funds need not revert to the general fund at the end of a year, but rather may be allowed to accumulate.  Usually, cumulative fund may be expended only for certain types of capital items, as specified by statutes.  A statutory list of cumulative funds and the procedures for establishing them is at IC 6-1.1-41. 

Department of Local Government Finance (DLGF).  Frequently confused with the State Board of Accounts, the DLGF is an agency of State government that is responsible for the regulation of the property tax system in general and the budgets of local government units as well.  Further information is available on their website.

Encumbrance.  The term “encumbrance” refers to a situation in which an appropriation has been committed for a particular expenditure and therefore cannot be recommitted for another expenditure.  A typical example would be a situation in which a purchase order or other commitment has been made with a vendor for the deliver of goods or services.  Such a commitment is only allowable if the office making the commitment had an appropriation for the full amount. Once such a commitment is made, the appropriation is considered “encumbered” until the goods or services are delivered and the payment made.  The purpose of accounting for an encumbrance is to assure that the same appropriation is not committed twice.  In practice, encumbrances are usually recorded in order to allow a department to carry forward its appropriations from one year to the next.  

Executive.  Sec. 5. "Executive" means:
        (1) board of commissioners, for a county not having a consolidated city;
        (2) mayor of the consolidated city, for a county having a consolidated city;
        (3) mayor, for a city;
        (4) president of the town council, for a town;
        (5) trustee, for a township;
        (6) superintendent, for a school corporation; or
        (7) chief executive officer, for any other political subdivision.  IC 36-1-2-5 

Fiscal Body.
        (1) county council, for a county not having a consolidated city;
        (2) city-county council, for a consolidated city or county having a consolidated city;
        (3) common council, for a city other than a consolidated city;
        (4) town council, for a town;
        (5) township board, for a township;
        (6) governing body or budget approval body, for any other political subdivision that has a governing body or budget approval body; or
        (7) chief executive officer of any other political subdivision that does not have a governing body or budget approval body. IC 36-1-2-6

Fiscal officer.
Sec. 7. "Fiscal officer" means:
    (1) auditor, for a county not having a consolidated city;
    (2) controller, for a:
        (A) consolidated city;
        (B) county having a consolidated city, except as otherwise provided; or
        (C) second class city;
    (3) clerk-treasurer, for a third class city;
    (4) clerk-treasurer, for a town; or
    (5) trustee, for a township.

Legislative body.  Sec. 9. "Legislative body" means the:
        (1) board of county commissioners, for a county not subject to IC 36-2-3.5 or IC 36-3-1;
        (2) county council, for a county subject to IC 36-2-3.5;
        (3) city-county council, for a consolidated city or county having a consolidated city;
        (4) common council, for a city other than a consolidated city;
        (5) town council, for a town;
        (6) township board, for a township;
        (7) governing body of any other political subdivision that has a governing body; or
        (8) chief executive officer of any other political subdivision that does not have a governing body.  IC 36-1-2-9

Levy.  The term "levy" means the amount of money in dollars raised by a property tax.  The levy equals the property tax rate multiplied by the net assessed value of the taxing district.  For example, if $100,000 of property tax revenue is to be raised for the General Fund, one may say, the General Fund property tax levy is $100,000.

LOIT.  "LOIT" is a set of initials which stands for "local option income tax".  It is sometimes used as a generic term to describe COIT, CAGIT, or EDIT.  however, it can also mean a particular application of COIT or CAGIT, in which a local income tax can be used for a combination of property tax relief and public safety expenditure. 

Municipal corporation.  Sec. 10. "Municipal corporation" means unit, school corporation, library district, local housing authority, fire protection district, public transportation corporation, local building authority, local hospital authority or corporation, local airport authority, special service district, or other separate local governmental entity that may sue and be sued. The term does not include special taxing district.  IC 36-1-2-10

Municipality.  Sec. 11. "Municipality" means city or town.  IC 36-1-2-10

MVH.  "MVH" is a set of initials which stands for "motor vehicle highway".  The term is commonly used to refer to gasoline taxes and certain other revenues which are collected by the state and distributed to local units of government.  The MVH distribution is the amount set by the state to each local unit.  The money is deposited into the MVH Fund and used primarily to finance the local street, road or highway department.

Political subdivision.  Sec. 13. "Political subdivision" means municipal corporation or special taxing district.  IC 36-1-2-13

Safety board.  Sec. 16. "Safety board" means the board of public safety or board of public works and safety of a city.  IC 36-1-2-16

School corporation.  Sec. 17. "School corporation" means a local public school corporation established under state law. The term includes a school city, school town, school township, metropolitan school district, consolidated school corporation, county school corporation, township school corporation, community school corporation, or united school corporation.  IC 36-1-2-16

Special taxing district.  Sec. 18. "Special taxing district" means a geographic area within which a special tax may be levied and collected on an ad valorem basis on property for the purpose of financing local public improvements that are:
        (1) not political or governmental in nature; and
        (2) of special benefit to the residents and property of the area.  IC 36-1-2-18

State Board of Accounts. The State Board of Accounts is the agency of State government charged primarily with the responsibility of examining the books and records of State and local governments for compliance with State laws and regulations.  Further information is available on their website.

Statute.  Sec. 19. "Statute" means a law enacted by the general assembly.  IC 36-1-2-19

Taxing district.  Sec. 20. "Taxing district" means a geographic area within which property is taxed by the same taxing entities and at the same total rate.  IC 36-1-2-20

Town.  Sec. 21. "Town" refers to an incorporated town, unless the reference is to a school town.  IC 36-1-2-21

Township.  Sec. 22. "Township" refers to a civil township, unless the reference is to a congressional township or school township. IC 36-1-2-22

Unit.  On the website, the term “unit” is used generally to mean any local governmental entity.  However, the statutory definition of “unit” is at IC 36-1-23: “Unit” means county, municipality or township.  IC 36-1-2-23