Chapter 3.48
GENERAL FUND RESERVE POLICY
Sections:
3.48.030 Budget stabilization reserves.
3.48.050 Reserves of real estate excise tax (REET) proceeds.
3.48.010 Reserve policy.
It shall be the policy of San Juan County to reserve general fund resources in order to (A) maintain operating cash in the general fund to smooth short-term imbalances between revenues and expenditures; (B) accumulate budget stabilization reserves to mitigate impacts of wide swings in general fund revenue; (C) accumulate capital reserves to enable the County to respond to short-term and long-term capital needs and opportunities consistent with an approved capital facilities plan; and (D) ensure availability of funds to meet long-term debt obligations. (Ord. 13-2012 § 2; Ord. 35-2009 § 1)
3.48.020 Operating cash.
“Operating cash” is defined as the projected ending fund balance of the general fund. Operating cash mitigates short-term imbalances between general fund revenues and general fund expenditures, and allows for the occasional emergency expenditure.
Each preliminary budget presented by the County administrator to the County council shall include in the general fund budget a line item showing operating cash of not less than 10 percent of projected general fund expenditures.
The amount budgeted for operating cash may, during a fiscal year, be reduced below eight percent of projected general fund expenditures only if the County council makes a written finding that an emergency or other extraordinary circumstance exists that requires use of operating cash. (Ord. 13-2012 § 3; Ord. 35-2009 § 2)
3.48.030 Budget stabilization reserves.
A. General. “Budget stabilization reserves” are defined as general fund resources accumulated for the purpose of mitigating the impact of wide swings in general fund revenues.
B. Creation of Fund. There shall be created a fund called the budget stabilization fund. Budget stabilization reserves will be held in the budget stabilization fund. The County auditor shall administer the budget stabilization fund, and shall serve as the fund manager.
C. Administrator’s Recommendation for Deposit. The County administrator shall include in the preliminary budget for each year a line item showing the recommended amount of deposits to the budget stabilization fund during the budget year to carry out the general reserve policy set forth in SJCC 3.48.010 as follows:
1. One-half of one percent of estimated expenditures included in the general fund (current expense fund 0001) preliminary budget for the budget year; and
2. Twenty-five percent of the amount by which total sales tax revenue to the general fund (current expense fund 0001) in the year preceding the budget year exceeded total sales tax revenue to the general fund in the second preceding year, excluding any new sources of sales tax revenue that cannot be compared to the previous year. If the amount is zero or negative, no deposit shall be recommended pursuant to subsection (C)(1) of this section; and
3. Other revenue resources as deemed appropriate.
4. The administrator’s duties under this section shall continue until such time as resources in the budget stabilization fund exceed 15 percent of prior year revenues to the general fund.
D. Deposit. There shall be deposited to the budget stabilization fund an amount determined by the County council in the adopted budget or any amendment thereto. Unless otherwise directed by the County council in budget ordinances, one-half of the amounts appropriated shall be deposited in April and the remainder shall be deposited in October.
E. Use of Budget Stabilization Reserves. Budget stabilization reserves shall accumulate from year to year until such time as one or more of the following events occur:
1. Resources in the budget stabilization fund exceed 15 percent of prior year revenues to the general fund, in which case the County council may appropriate all or part of the accumulated reserves in excess of 15 percent of prior year general fund revenues; or
2. Total general fund revenues (excluding revenue from fees or charges of the community development and planning department; material one-time sources of revenue such as grants; all revenues guaranteed to certain programs by the 2009 or subsequent levy lid lifts; any new sources of revenue which cannot be compared to the previous year; and any other revenue which the County council determines should be excluded from the calculation for a budget year) are projected to be three percent, or more, less than revenues received (or projected to be received) in the previous year; or
3. The County council makes a written finding that emergency or other exigent circumstances exist that require use of the budget stabilization reserves.
4. In no event may an appropriation from the budget stabilization fund exceed the lesser of: (a) one-half of the actual balance of the fund on December 31st of the year preceding the budget year; or (b) the amount by which the general fund revenues, as defined in subsection (E)(2) of this section, fall below the actual revenues for the prior year.
F. Interest. Interest earned on the budget stabilization fund will accrue to the fund itself, rather than to the general fund. (Ord. 13-2012 § 4; Ord. 35-2009 § 3)
3.48.040 Capital reserves.
A. General. “Capital reserves” are defined as general fund revenues accumulated for the purpose of acquiring, building, or remodeling County capital facilities (buildings, land, infrastructure, and major software systems) consistent with an adopted capital facilities plan. Capital reserves will accumulate in an account of the capital improvement fund. Sources and uses of capital reserves will be accounted for separately from other capital improvement funds.
B. Administrator’s Recommendation for Deposit. Contributions to capital reserves shall be recommended by the County administrator as a line item in the preliminary budget as follows:
1. One hundred thousand dollars or more of general fund resources; and
2. Other revenue resources as deemed appropriate.
3. There is no maximum amount above which capital reserves cannot accumulate. Rather, capital reserves shall accumulate from year to year until such time as they are appropriated by the County council.
C. Deposit. There shall be deposited to the capital reserves account of the capital improvement fund an amount determined by the County council in the adopted budget or any amendment thereto. Unless otherwise directed by the County council in budget ordinances, one-half of the amount appropriated shall be deposited in April and the remainder shall be deposited in October.
D. Use of Reserves. The use of capital reserves must be authorized by the County council, and for purposes included in an approved capital facilities plan. The capital facilities plan must be:
1. Developed by a capital committee, to be comprised of the County administrator, the public works director, the auditor, the sheriff, the prosecutor, the parks director, and a representative from the courts.
2. Annually reviewed by the capital committee as part of the budget process.
3. Adopted by the council as a part of the budget.
E. Interest. Interest earned on capital reserves will accrue to the capital reserves account of the capital improvement fund rather than to the general fund. (Ord. 13-2012 § 5; Ord. 35-2009 § 4)
3.48.050 Reserves of real estate excise tax (REET) proceeds.
A. General. A portion of the REET proceeds shall be held in the capital improvement fund in separate accounts: one account for REET 1 reserves and one account for REET 2 reserves. The purpose of this accumulation will be to ensure that any debts being paid out of REET revenues will have adequate funding for at least one year in the future.
B. Administrator’s Recommendation for Reserves. Holdbacks for REET reserves shall be recommended by the County administrator and shown as a line item in the preliminary budget as follows:
1. An amount of REET 1 proceeds equal to the budget year’s long-term debt obligations for REET 1 eligible projects.
2. An amount of REET 2 proceeds equal to the budget year’s long-term debt obligations for REET 2 eligible projects.
3. So long as permitted uses of REET 1 revenues and REET 2 revenues are not identical, REET 1 reserves and REET 2 reserves must be separately tracked and separately reported.
C. Use of Reserves. Real estate excise tax revenues may only be used for eligible projects.
Any use of REET 1 capital reserves and REET 2 capital reserves must be authorized by the County council.
D. Interest. Interest earned on the REET reserves will accrue to the capital reserves account of the capital improvement fund rather than to the general fund. (Ord. 13-2012 § 6)