Chapter 3.25
GENERAL FUND COMMITTED RESERVE POLICY
Sections:
3.25.020 General fund committed reserve policy.
3.25.030 Use of committed reserve.
3.25.040 Replacement requirements.
3.25.060 Vote to appropriate funds from general fund committed reserve.
3.25.010 Purpose.
The purpose of this policy is to ensure that the city maintains adequate liquid financial reserves in the general fund to protect against unanticipated circumstances and events resulting in revenue shortfalls or unexpected expenditures. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-62)
3.25.020 General fund committed reserve policy.
1. The city council hereby establishes a general fund committed reserve and declares that it is the policy of the city of South Lake Tahoe to provide in each fiscal year a reserve comprised of committed general fund balance equal to 25 percent of the annual budgeted general fund expenditure appropriations for such fiscal year.
2. Each year, upon completion of the city’s audited financial statements, the city manager and director of finance shall report the status of the general fund committed reserve and on the adequacy of the 25 percent required reserve level. If in any fiscal year the committed reserve policy is not met, the city manager and director of finance shall present to council a strategy to meet the committed reserve policy.
3. The general fund committed reserve shall be maintained to provide the city with sufficient working capital and a comfortable margin to provide one-time or temporary financing for the following purposes:
(a) When the city faces economic recession/depression and the city must take budget action.
(b) When the city is impacted by a natural disaster or any other emergency.
(c) When the city experiences unexpected declines in revenues and/or when unpredicted large one-time expenditures arise.
(d) When the city faces an unexpected liability created by federal or state legislative action. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-64. Formerly 3.25.030)
3.25.030 Use of committed reserve.
Prior to appropriating funds from the general fund committed reserve, the city council shall find that an emergency or extraordinary need exists to justify the use of these funds. Funds shall be appropriated from the general fund committed reserve pursuant to this section only after the city manager and director of finance have prepared and presented to the city council an analysis of the emergency or extraordinary need that addresses the nature of the proposed expenditure(s) and any associated revenue requirements in subsequent years.
The following shall guide how the general fund committed reserve should be used when the expenditure shall cause the reserve to be below the general fund committed reserve policy level or if the reserve already fails to meet the required policy level:
(a) Use of the general fund committed reserve to phase into fiscal distress periods gradually, focusing on maintaining the council’s strategic priorities.
(b) To the extent possible, use of the general fund committed reserve as the last resort to balance the city budget.
(c) To the extent possible, appropriations of the general fund committed reserve shall not exceed 25 percent of the reserve per year.
(d) The general fund committed reserve should not be used to support recurring operating expenditures. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-65. Formerly 3.25.040)
3.25.040 Replacement requirements.
Funds shall be allocated each year in the budget process to replace any use of the 25 percent general fund committed reserve during the preceding fiscal year that caused the committed reserve to fall below the reserve policy level. Should sufficient funds not be available to replenish the general fund committed reserve used in the preceding fiscal year, the city manager and director of finance shall provide a funding plan to the council, including proposed source(s) of funding and a timeline to bring the balance of the general fund committed reserve to the 25 percent of general fund operating expenditures. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-66. Formerly 3.25.050)
3.25.050 Use of general fund balance in excess of the 25 percent committed reserve policy requirement.
To the extent funds accumulate in excess of the 25 percent general fund committed reserve policy requirement, such funds may become assigned fund balance by appropriation to the capital projects fund, or appropriation for other intended uses by the city council. It is the intent of the city council to effect such appropriations through the annual budget resolution, a midyear budget resolution, or a budget amendment resolution.
Any assigned fund balance not expended for its intended use within the annual budget cycle, or at the completion of a capital project, will lapse in accordance with the South Lake Tahoe Resolution No. 2015-41 (resolution amending the financial policies of the city of South Lake Tahoe regarding budget management, capital assets, unclaimed checks, and grant funding and compliance), and may be amended. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-67. Formerly 3.25.060)
3.25.060 Vote to appropriate funds from general fund committed reserve.
Any vote of the city council to appropriate funds from the general fund committed reserve when the reserve policy is not being met, or when the appropriation will result in the reserve policy not being met, shall require a four-fifths vote of the city council. (Ord. 1018 § 1 (Exh. A); Ord. 1109 § 1 (Exh. A). Code 1997 § 11-68. Formerly 3.25.070)