HomeMy WebLinkAboutResolution No. 2011-77 Draft 1COUNTY COUNCIL COUNTY OF KAUAI r No. 2011-77, Draft 1 RESOLUTION ESTABLISHING THE COUNTY OF KAUAI RESERVE FUND AND RESERVE FUND POLICY WHEREAS, the County of Kauai has determined that it is in its best interest to establish a clear financial policy of maintaining a Reserve Fund within the General Fund in the range of 20-25% of the previous year's actual operating general fund expenditures, encumbrances and general fund transfers to other funds, as identified in the most recent Comprehensive Annual Financial Report (CAFR); and WHEREAS, it has been determined that the County of Kauai should establish a Reserve Policy and create a Reserve Fund; and WHEREAS, the Reserve Fund Policy has been established based on industry best, practices and recommendations set forth by the Government Finance Officers of America; and WHEREAS, the County of Kauai needs to retain sufficient funds for County operations; and WHEREAS, the second largest revenue source to the County of Kauai, the transient accommodation tax (TAT) is controlled by the State of Hawaii and not the County of Kauai; and WHEREAS, the County will need to fiscally buffer impacts of revenue reductions within the County, such as real property taxes and miscellaneous other taxes and fees; and WHEREAS, the County has experienced economic volatility as a result of local, state, national and world economic events and natural disasters and must sustain adequate levels of services through these periods; and WHEREAS, the County has and will need to continue to mitigate State or Federal Government budgetary actions and unfunded mandates that affect County revenues and expenditures; and WHEREAS, the County has experienced multiple years of revenue reductions attributable to declining real property values; and WHEREAS, the County has experienced two significant weather events in the last thirty (30) years that had a significant impact on the County budget and delivery of services and needs to be able to absorb initial emergency and disaster related costs; and WHEREAS, the County's economic base is not as large or as diversified as other city or county governments; and
WHEREAS, the County will need to be able to absorb liability settlements and deductable costs; now, therefore,BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF KAUAI,STATE OF HAWAII, that the County of Kauai establish this Reserve Policy and create a Reserve Fund.BE IT FURTHER RESOLVED, that the Reserve Fund is intended to be used for non-recurring costs and is based on the following estimates and apportioned categories:Operations: Cash Flow/Working Capital 50%Economic Fluctuations: Budgetary Stabilization 25%Significant/Extreme Events: Initial Disaster Response 15%Risk Management: Non-Insured Losses 10%BE IT FURTHER RESOLVED, that the utilization of the Reserve Fund should be made via ordinance and for the specific purposes listed above.BE IT FURTHER RESOLVED, that the Reserve Fund should only be used to provide ashort-term solution to maintaining necessary services until revenue growth and/or expenditure reductions are instituted to balance the budget and normalize cash flow.BE IT FURTHER RESOLVED, that in the event that funds from the Reserve Fund are utilized, the County Council and County Administration shall timely propose and approve a financial plan to replenish the Reserve Fund to prescribed policy levels. Depending on the circumstances, strategies to replenish reserves could include accessing budget surpluses, reducing expenditures and adoption of revenue enhancement measures. Revenue measures may include but is not limited to: long and short-term financing; adjusting real property tax rates; fuel taxes;vehicle weight taxes; and various other established fees for services. Effort should be made to restore necessary funds to required policy levels within one (1) year.If one-third (1/3) or more of the Reserve Fund is utilized, a longer termed plan to replenish the reserves may be considered. However, the replenishment of the Reserve Fund should not exceed three (3) years.BE IT FINALLY RESOLVED, that a copy of this Resolution be forwarded to Mayor Bernard P. Carvalho, Jr., and Wallace Rezentes, Jr., Director of Finance.INTRODUCED BY: /s/ JAY FURFARO V:\CS OFFICE FILES\RESOLUTIONS\2010-2012 term\2011-77, draft ldoc/ds ss arc C ~ti uAcuruvca S~a.e 6 0 1 0 PJ-rLb{~.~.P. V~e ~. x~,a.C J~,eo,Q~u.~.om. ~. `L011-7Z, ~~ 1,a.o, a.~.retZ ~. ~A~e ~,.c~,C o~ .U~.e ~m,~. o~ ~J~.a~u,.`~., GJ.~a,~e Jlan4,ni,~L, ~t~u~.~e, J1.an.~.a,~L, Jlan4,ai~~., on, ~LJecer 2011.af~d 12/01/201 >