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88 <br />The City will strive to create a reserve in the Recreation Fund to equal 25% of the annual <br />89 <br />recreation budget. This reserve will provide a cash flow cushion and reduce the inter-fund <br />90 <br />borrowing expense to the Recreation Fund. Because of more frequent cash inflows, a 25% <br />91 <br />reserve will be adequate to support the daily cash needs of the fund <br />92 <br />93 <br />The Community Development Fund is supported solely by building permit fees and charges. <br />94 <br />Because the economic environment has a major effect on this Fund, a fund balance of 25-50 % <br />95 <br />of the annual budget is a reasonable target. It is expected that as economic downturns take <br />96 <br />place, this reserve will provide for a transition period during which the Council will be able to <br />97 <br />assess and to better match operations with the economic need <br />98 <br />99 <br />City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash <br />100 <br />flow, and for a reasonable level of equipment and infrastructure replacement. Major <br />101 <br />reconstruction or system upgrades, may need to be funded from enterprise revenue bonds. <br />102 <br />Annual utility rate reviews will be made in regard to projected operating expenses and capital <br />103 <br />improvements. The Council will, on an annual basis, establish rates in accordance to operating <br />104 <br />cost recovery and the projected capital improvements <br />105 <br />106 <br />All other operational funds e.g. License Center, Information Technology, etc. are expected to <br />107 <br />operate with positive reserve balances of 10-25% of the annual operating budget. Each <br />108 <br />operational fund shall be reviewed on an annual basis to assure the fund balance is in line with <br />109 <br />the fund's objectives <br />110 <br />111 <br />In the event the minimum fund balance drops below prescribed levels, the City shall dedicate <br />112 <br />new incoming property tax or program revenues (where applicable) in an amount sufficient to <br />113 <br />bring fund balance levels back into compliance within three fiscal years <br />114 <br />115 <br />Unless otherwise directed by the City Council, monies held in individual Funds shall be <br />116 <br />expended first from restricted fund balances, second from committed fund balances, then from <br />117 <br />assigned fund balances, before using unassigned fund balance <br />118 <br />119 <br />Implementation <br />120 <br />All fund reserves shall be reviewed each year at the time of the annual budget preparation for the <br />121 <br />purpose of complying with this policy. Budgets shall be prepared on an "All Resources" basis, so that <br />122 <br />the City Council and Community can readily discern the current and projected management of all <br />123 <br />reserves. <br />124 <br />125 <br />If aggregate reserves are outside of targeted goals, the Council is advised to create a plan to get reserves <br />126 <br />into targeted goal ranges by committing reserve funds using aggregate excess reserves to reduce the <br />127 <br />levy or make appropriate budget or tax levy adjustments. <br />128 <br />129 <br />130 <br />Page 4 of 5 <br />