2001 Approved Budget - Laserfiche WebLink

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Operating Fund Reserve Policies PURPOSE To provide a cushion against unexpected revenue and income interruptions. :*To provide working capital by ensuring sufficient cash flow to meet the City’s needs throughout the year. POLICY The City will maintain a general fund reserve of 50% of the general fund’s total annual operating budget.Any surplus beyond the required general fund reserve may be transferred to another reserve fund with a funding shortfall. The City will strive to create a reserve in the Recreation Fund to equal 25% of the recreation budget.This reserve will provide a cash flow cushion and reduce the borrowing expense to the Recreation Fund.Because of more frequent cash inflows, a 25% reserve will be adequate to support the daily cash needs of the fund. The Community Development Fund is supported solely by building permit fees and charges. Because the economic environment has a major effect on this Fund, a fund balance of 100% of the annual budget is a reasonable goal.It is expected that as economic downturns take place, this reserve will provide for a transition period during which the Council will be able to assess and to better match operations with the economic need. City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash flow, and for a reasonable level of equipment and infrastructure replacement.Major reconstruction or system upgrades, may need to be funded from enterprise revenue bonds.Annual utility rate reviews will be made in regard to projected operating expenses and capital improvements. The Council will, on an annual basis, establish rates in accordance to operating cost recovery and the projected capital improvements. All other operational funds e.g. license center, wireless, gambling, etc are expected to operate with positive reserve balances of at least 25% of the annual operating budget. However, as many of these funds are for a short duration or are supporting specific projects, balances may be above or below that limit in any given year.Each operational fund shall be reviewed on an annual basis to assure the fund balance is in line with the fund’s objectives. A one time capital gain on the City’s treasury portfolio has provided a fund which has been dedicated to providing an ongoing tax reduction to Roseville property taxpayers.The projection and business plan is to reduce the required tax levy increase by approximately annually. IMPLEMENTATION All fund reserves shall be reviewed each year at the time of the annual budget preparation.Budgets shall be prepared on an “All Resources” basis, so that the City Council and Community can readily discern the current and projected management of all reserves. II-19