Village officials adopt policy to cover unexpected costs
Village officials have 24.5 percent of the budget not dedicated to specific expenses and have adopted a policy that will have the figure remain between 15 and 25 percent through future spending plans.
The amount of fund balance was discussed during a meeting last week, with officials saying the money is needed to cover unexpected costs and emergency situations.
“The minimum fund balance is to protect against cash flow shortfalls related to the timing of projected revenue receipts and to maintain budget stabilization,” Mayor Gary Bassett said. “It forces fiscal responsibility on us to consider that and be public with it, where now we do not have that.
“We do not have a fund balance policy,” he added. “It doesn’t exist.”
At the end of August, there was $578,088 without specific items attached in a $2,359,097 village budget for 2017-18.
Bassett said a review of other municipal budgets showed a wide range of fund balances.
“It’s really dependent on everybody’s budget, what kind of projects they think they need to do, (and) what they think the future is for their municipality,” he said.
The state Comptroller’s Office does not have specific percentages it uses for municipalities, but material sent to officials on budget planning advises reviewing the fiscal stress management system for having cash ready to pay bills.
“For counties, cities,
towns and villages, the threshold for low available fund balance is defined in the FSMS (Fiscal Stress Monitoring System) as less than 10 percent of expenditures, and low total fund balance is defined as less than 20 percent of expenditures,” it said.
Spokesman Brian Butry on Wednesday said the recommendation is to assess a municipal budget based on how much cash is on hand, the amount of short-term debt, operating
deficits and fixed costs. He noted that municipalities are cautioned to avoid increasing tax levies if there has been an ongoing large fund balance.
“We’ve made that recommendation to school districts and municipalities in the past that if ... you’re running a surplus every year, you’re carrying or increasing your fund balance every year, then there’s really no need to increase your tax levy every year,” he said.