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HomeMy WebLinkAboutResolution No. 2022-36, Draft 1COUNTY COUNCIL COUNTY OF KAUA'I l\,eso I utionNo. 2022-36,Draft 1 RESOLUTION AMENDING RESOLUTION NO. 2017-28, RELATING TO THE COUNTY OF KAUA'I RESERVE FUND AND RESERVE FUND POLICY BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF KAUA'I, STATE OF HAWAI'I SECTION 1. to read as follows: Resolution No. 2017-28 is hereby amended in its entirety "WHEREAS, the County of Kaua'i has determined that it is in its best interest to establish a clear financial policy of maintaining a Reserve Fund within the General Fund with a target minimum of [30%] thirty percent (30%) of the previous year's General Fund revenues, as identified in the most recent [Comprehensive Annual Financial Report (CAFR)] Annual Comprehensive Financial Report (ACFR); and WHEREAS, the County of Kaua'i has previously established a Reserve Fund Policy and created a Reserve Fund; and WHEREAS, the Reserve Fund Policy was established based on industry best practices and recommendations set forth by the Government Finance Officers Association (GFOA); and WHEREAS, the G FOA has recently revised its recommendations for the County of Kaua'i, and these revised recommendations should be reflected in the County's Reserve Fund Policy; and WHEREAS, the County of Kaua'i needs to retain sufficient funds for County operations; and WHEREAS, the County of Kaua'i recognizes a housing crisis for affordable housing exists on the island; and [WHEREAS, the second largest revenue source to the County of Kaua'i, the Transient Accommodations Tax (TAT), is controlled by the State ofHawai'i and not the County of Kaua'i; and] WHEREAS, the County needs 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 1 0 0 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 historically 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 significant impacts on the County budget and delivery of services and the County must 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 needs to be able to absorb liability settlements and deductible costs; now therefore, WHEREAS, the Council deems it desirable that the County revise its Reserve Fund Policy and Reserve Fund requirements by formal adoption by resolution as expressed herein and attached hereto as Exhibit "A." BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF KAUA'I, STATE OF HAWAI'I, that the County ofKaua'i revise its Reserve Fund Policy and Reserve Fund requirements. BE IT FURTHER RESOLVED that the Reserve Fund is intended to be used for unanticipated and non-recurring costs and is reserved based on priority in the following order: 1. Disaster response to significant/extreme events 2. Self-Insurance Provision 3. Revenue Volatility 4. Unfunded Mandates and Legal Claims 5. Affordable housing infrastructure or land acquisition BE IT FURTHER RESOLVED that the aforementioned categories shall not limit the County from moving available funds from one category to another in the event of unforeseen conditions[.], with the exception that the amount used for appropriation for affordable housing projects shall not exceed twenty percent (20%) of the Reserve Fund. BE IT FURTHER RESOLVED that the Reserve Fund should only be used to provide a short-term solution to maintaining necessary services until revenue growth and/or expenditure reductions are instituted to balance the budget and normalize cash flow[.], or to acquire or fund affordable housing projects as described in item #5. Reserves shall not normally be applied to recurring annual operating expenditures. The reserves may, however, be used to allow time for the County to restructure its operations in a deliberate manner. 2 r BE IT FURTHER RESOLVED that if 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 are not limited to: long-term 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 three (3) years[.], with the exception that amounts used for affordable housing projects be restored in two (2) years. BE IT FURTHER RESOLVED that at the end of each Fiscal Year, the Department of Finance will provide a report on the audited year-end financial results. Should annual General Fund revenues exceed expenditures and other financing sources, a year-end excess of revenues over expenditures and other financing sources shall be reported. Any portion of the year-end revenues over expenditures and other financing sources that contributes to the General Fund balances in excess of the established Reserve Fund targeted minimum of [30%] thirty percent (30%) shall be deemed available for allocation amongst the following priority items: 1. Transfer to the capital program fund for appropriation to capital improvement program budget and/or deferred maintenance needs. 2. [Transfer to road/bridge repairs or reconstruction initiatives.] Transfer to affordable housing projects. 3. Transfer to existing long term debt reduction efforts, debt service payments related to long term borrowing, other post-employment benefit contributions, and pension liabilities. 4. Re-appropriate to offset one-time shortfalls contributing to budget-year operating expenditures. BE IT FURTHER RESOLVED that such portions of Resolution No. 2011-77, Draft 1, passed by the Kaua'i County Council on December 1, 2011, as are inconsistent with the terms of this Resolution, be, and hereby are, repealed; and BE IT FINALLY RESOLVED that a copy of this Resolution be forwarded to the Mayor and the Director of Finance." SECTION 2. Such portions of Resolution No. 2017-28, passed by the Kaua'i County Council on March 22, 2017, as are inconsistent with the terms of this Resolution, be, and hereby are, repealed. SECTION 3. This Resolution shall take effect upon its approval. 3 0 0 SECTION 4. A copy of this Resolution shall be forwarded to the Mayor and the Director of Finance. Introduced by: /s/ BILL DECOSTA ls/BERNARD P. CARVALHO, JR. V:\RESOLUTIONS\2020-2022 TERM\Reso2022-36, Draft 1 -Amendment to Reserve Fund Policy BD_BC_CNT_ks.docx ~ve <!Carl1albo X <!Cbock X <!Cob:lben X :me<!Costa X (lfuslin X 1kanesbiro X 1kuali'i X m:otal 7 ~av QExcu.Jl'elJ 31\.ecuS'elJ 0 0 0 QCerttfftate @f ~boptton We berebp certifp tbat 3Resolution 1l}o. 2022-36, Draft 1 was abopteb hp tbe <!Council of tbe <!Countp of 1kaua'i, ~tate of r&}ab:lai'i, JLibu'e, 1kaua'i, r&}ab:lai'i, on September 21. 2022. ~ & tiresibing ®fficer :matell September 22, 2022 4