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In addition, the City also maintains cash reserves in separately-held capital replacement funds. <br />These funds do not provide for any day-to-day-activities. The following table depicts the City's <br />current cash reserve levels as of 12/31/12 (the last year for which audited financial statements are <br />available) for key capital replacement funds: <br />Fund <br />Police Vehicles & Equipment <br />Fire Vehicles & Equipment <br />Parlcs & Rea Vehicles & Equipment <br />Public Worlcs Vehicles & Equipment <br />Administration Equipment <br />Finance Equipment <br />Central Services Equipment <br />Building Replacement <br />Pathway Maintenance <br />Parks Improvement Program <br />Street Replacement <br />12/31/2012 <br />Reserves <br />$ 249,435 <br />582,719 <br />148,710 <br />426,93 8 <br />4,930 <br />4,930 <br />(516) <br />691,644 <br />250,025 <br />349,136 <br />10,245,976 <br />$ 12,953,927 <br />Target <br />Pct. <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />Actual <br />Pct. <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />n/a <br />As indicated in the chart, the City has approximately $12.9 million in cash reserves in its key <br />capital replacement funds — funds set aside for fiiture capital. <br />Nearly all of these reserves are unrestricted meaning they could be re-purposed. However, doing <br />so could come at great expense to existing programs and service levels. The Council is strongly <br />advised to look at the 20-year Capital Improvement Plan (CIP) to fully ascertain whether the <br />reserves held in these funds are sufficient to meet the City's long-term capital asset needs. <br />Relationship between Reserves & Property T�xes <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 2012, the City's operating cash reserves earned <br />approximately $400,000 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 $360,000 in earnings; a decrease of $40,000. This would have necessitated a corresponding <br />increase in the tax levy and/or fees to lceep 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 day-to-day operations for successive years. In addition, to remain <br />strong, cash reserve levels need to continue growing in proportion with the operating budget. <br />