Staff floats new budget reserve policy

City Council may want to adopt a new budget reserve policy, Deputy Chief Financial Officer Ed Van Eenoo told Council members during a Wednesday work session. The current policy states that Council should put aside money equaling 6 percent of its General Fund requirements into its Emergency Reserve Fund, which is intended for “unanticipated or extraordinary needs of an emergency nature,” such as a natural disaster. It similarly states that Council should set aside the same amount of money for the Budget Stabilization Reserve Fund, which is intended to provide the city a cushion in years when tax receipts are lower than usual due to an economic downturn. The combined 12 percent reserves are recommended, but not mandated, noted Van Eenoo. It would be wise, he suggested, for Council to put aside even more in times of economic prosperity. The policy revision language that staff is submitting for Council’s consideration during the upcoming budget will call for the city to put aside 15 percent in reserves in years in which sales tax revenue grows by more than 5 percent.