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CC_Minutes_2012_0827
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Roseville City Council
Document Type
Council Minutes
Meeting Date
8/27/2012
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However, even with these reserve levels, the City remains $1.8 million below the Council- <br /> adopted target levels. In addition, only $7.2 million is unrestricted and available for general <br /> public purposes. Again, the Council is cautioned when considering whether to re-purpose these <br /> funds. Doing so would leave critical functions in a weaker financial condition. <br /> The City also maintains cash reserves in its capital replacement funds. The following table <br /> depicts the City's current cash reserve levels as of 12/31/11 (the last year for which audited <br /> financial statements are available) for key capital replacement funds: <br /> Target Actual $$Over $$Amount <br /> Fund 2011 Pct. Pct. (Under) Unrestricted <br /> Police Vehicles&Equipment $ 133,242 n/a n/a n/a $ 133,242 <br /> Fire Vehicles&Equipment 368,041 n/a n/a n/a $ 368,041 <br /> Parks&Rec Vehicles&Equipment 25,358 n/a n/a n/a $ 25,358 <br /> Public Works Vehicles&Equipment 204,329 n/a n/a n/a $ 204,329 <br /> Central Svcs.Equipment 93,928 n/a n/a n/a $ 93,928 <br /> Building Replacement 576,280 n/a n/a n/a 576,280 <br /> PIP 322,823 n/a n/a n/a - <br /> Street Replacement $12,829,107 n/a n/a n/a $ 12,829,107 <br /> Total $14,553,108 $ 14,230,285 <br /> As indicated in the chart, the City has approximately $14.5 million in cash reserves in its key <br /> capital replacement funds — funds set aside for future capital. Nearly all of these reserves are <br /> unrestricted meaning they could be re-purposed. Again, doing so could come at great expense to <br /> existing programs and service levels. The Council is strongly advised to look at the 20-year <br /> Capital Improvement Plan (CIP) to fully ascertain whether the reserves held in these funds are <br /> sufficient to meet the City's long-term capital asset needs. <br /> Relationship between Reserves & Property Taxes <br /> In addition to the roles identified above, cash reserves also play a role in determining what the <br /> City's property tax levy needs to be. In 2011, the City's operating cash reserves earned <br /> approximately $850,000 in interest earnings. These interest earnings were used to provide <br /> funding for current operations, thereby reducing the amount needed from property taxes or fees. <br /> A significant portion of these earnings were contained in the Street Replacement Fund and were <br /> used to finance the annual Mill and Overlay Program for neighborhood streets. <br /> Holding all other factors constant, if reserve levels drop by 10%, the City would have earned <br /> only $750,000 in earnings; a decrease of $100,000. This would have necessitated a <br /> corresponding increase in the tax levy and/or fees to keep funding levels the same. <br /> Final Comments <br /> It is recognized that the City's overall financial condition is strong in large part due to its healthy <br /> reserve levels. However, the Council is advised to refrain from unsustainable practices such as <br /> using reserves to support regular on-going operations. In addition, to remain strong, cash reserve <br /> levels need to continue growing in proportion with the operating budget. <br /> 3 <br />
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