Policy Approach

The City shall establish a minimum unreserved fund balance to aid the City in responding to emergency situations, unforeseen economic opportunities, grant matches and temporary reductions in revenue. This reserve shall be maintained at an amount equal to at least twelve percent (12%) and not more than twenty percent (20%) of the prior year’s budgeted general fund revenues. This reserve will be part of the City’s undesignated fund balance and will be maintained in addition to any reserved or designated fund balance.
The City may withdraw funds from the unreserved fund balance to provide sufficient working capital to eliminate the need for short-term borrowing. The Council may withdraw funds from the unreserved fund balance after the current year contingency has been expended. The emergency reserve will only be used when emergency expenditures or an unexpected revenue reduction would result in net deficit in the fiscal year budget. Restoration of the unreserved fund balance should begin in the fiscal year following its use.