65A - RECEIVE AND FILE REVENUE ESTIAMTES RELATED TO COVID-19

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In order to ensure proper maintenance of a continued balanced budget, the City Council will adopt a compensation and retirement benefit directive that provides guidance and conforms with the established budget directives and reserve requirements as outlined in this policy. One -Time Monies Fund Balance determined to be one-time in nature, including but not limited to: ending operating balance, unallocated fund balance or un-appropriated "Assigned" fund balance is herein classified as "One -Time monies". Utilization of one-time monies is allowable upon two-thirds approval by the City Council to be utilized in the event a structural budget deficit exists. Use of one-time funds is allowable for one-year and may be eligible for two consecutive years upon further consideration by the City Council. Unassigned Fund Balance In accordance with Governmental Accounting Standards Board (GASB) 54 and continuing to ensure a continued orderly operation of City Government and address any unforeseen economic occurrences, the City shall establish the following Reserve Accounts within the Unassigned Fund Balance category: • Operating Reserve • Economic Uncertainty Reserve • Unallocated Amount As a result of the GASB 54, the following fund balance categories were also created: Non -Spendable; Restricted; Committed; Assigned and Unassigned. Operating Reserve Account As a measure of prudent fiscal health and recommendations made by GFOA, the City created an Operating Reserve Account, disclosing a range where two months (approximately 16.67%) up to twenty percent (20%) of recurring General Fund (011) operating revenues or expenditures (including transfers) are maintained. At no time is it permissible for the Operating Reserve requirement to fall below the above -referenced threshold range. Such Operating Reserves shall not be used to fund any form of operating expenditures or to cover any budgetary shortfall other than to preserve ongoing cash flow needs for the City. If at any point in time it is deemed that the City budget is performing at a budgetary structural deficit and a "Fiscal Emergency" is declared, the use of the above -referenced Operating Reserve account is permissible for up to two consecutive fiscal years upon approval by two thirds of the City Council. The utilization of the Operating Reserve in Year Two (2) requires a plan to replenish the funds utilized. As a matter of prudence and fiscal solvency and in the event of a projected and/or realized structural deficit (budget basis), the City will utilize Economic Uncertainty (see below for account description) account funds prior to accessing the Operating Reserve account. Economic Uncertainty Account - It is hereby established that upon fulfillment of achieving a minimum Unassigned Reserve Account of 10%, the City shall consider the establishment of a reserve account for Economic Uncertainty. The reserve for Economic Uncertainty is established to offset any major variations in tax receipts as well as fees and charges or unforeseen cost increases. It is hereby established the City maintain a minimum reserve level of 1 to 10% of recurring General Fund revenues with an objective of attaining a maximum goal of 10%. - Upon determination by the Finance Department, that negative variations in projected revenues from the largest revenue sources defined as Sales tax, Property tax, Property tax in Lieu, Utility Users tax, Business Tax, and Hotel Visitors tax exceed 2% with no corresponding General Fund expenditure offset, then the Budget & Financial Polices (Rev. 6/2017) 65A-9 Page 2