COMMITTEE:Finance
DATE: June 11, 1998
SUBJECT: Fiscal Year 1999 Budget-General Fund Reserve
RECOMMENDATION:
That City Council approve a $2,800,000 General Fund reserve for the fiscal year 1999 budget.
BACKGROUND:
Over the last several fiscal years, the City Manager has recommended and Council has
approved a General Fund reserve in the budget. As part of the fiscal year 1998 budget process, Council requested that they provide prior approval of the recommended reserve amount before it is presented as part of the proposed budget- The following table compares the budgeted General Fund reserve over five fiscal years
Fiscal Year Reserve Amount Percent of GF Revenue
1999___________$2,800,000___________7.5%
1998___________$2,661,800___________7.2%
1997___________$1,600,000___________4.5%
1996_____________$800,000___________2.4%
1995_____________$200,000____________.6%
Most financial literature and rating agencies recommend maintaining a minimum five
percent (5%) General Fund reserve. However, indications have been, and staff certainly concurs, that a 10 percent (10%) reserve may be advisable due , in large part, to the unpredictability of Pensacola's weather and the resulting impact on General Fund revenues sources. In recommending a $2.8 million reserve, staff took into consideration the stagnant revenue level this fiscal year. and the anticipated revenue growth of 3.2% in fiscal year 1999. Staff believes that holding reserves to a five percent (5%i increase is reasonable given the fact that the proposed General Fund expenditures budgeted for fiscal year 1999 increased by less than one
percent (1%) due to the number of increases departments have been asked to absorb.
FINANCIAL IMPACT:
Adequate reserves enhance the City's financial position and allow for continued current service levels to citizens should unforeseen emergencies or downturns in the economy occur. The City's adequate reserve level has been a factor in the favorable bond ratings we have recently received.
DATE: June 11, 1998
SUBJECT: Fiscal Year 1999 Budget-General Fund Reserve
RECOMMENDATION:
That City Council approve a $2,800,000 General Fund reserve for the fiscal year 1999 budget.
BACKGROUND:
Over the last several fiscal years, the City Manager has recommended and Council has
approved a General Fund reserve in the budget. As part of the fiscal year 1998 budget process, Council requested that they provide prior approval of the recommended reserve amount before it is presented as part of the proposed budget- The following table compares the budgeted General Fund reserve over five fiscal years
Fiscal Year Reserve Amount Percent of GF Revenue
1999___________$2,800,000___________7.5%
1998___________$2,661,800___________7.2%
1997___________$1,600,000___________4.5%
1996_____________$800,000___________2.4%
1995_____________$200,000____________.6%
Most financial literature and rating agencies recommend maintaining a minimum five
percent (5%) General Fund reserve. However, indications have been, and staff certainly concurs, that a 10 percent (10%) reserve may be advisable due , in large part, to the unpredictability of Pensacola's weather and the resulting impact on General Fund revenues sources. In recommending a $2.8 million reserve, staff took into consideration the stagnant revenue level this fiscal year. and the anticipated revenue growth of 3.2% in fiscal year 1999. Staff believes that holding reserves to a five percent (5%i increase is reasonable given the fact that the proposed General Fund expenditures budgeted for fiscal year 1999 increased by less than one
percent (1%) due to the number of increases departments have been asked to absorb.
FINANCIAL IMPACT:
Adequate reserves enhance the City's financial position and allow for continued current service levels to citizens should unforeseen emergencies or downturns in the economy occur. The City's adequate reserve level has been a factor in the favorable bond ratings we have recently received.
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