RESOLUTION 06-101

A RESOLUTION OF THE CITY COUNCIL OF HOMER ALASKA EXPRESSING ITS INTENT AND DESIRE REGARDING THE RESERVE FUND BALANCE CONTAINED IN THE GENERAL FUND.

WHEREAS, In recent years, the City Council has worked hard to maintain a reserve fund balance (above and beyond projected revenues and approved appropriations) in the General Fund of at least $2 million dollars, and

WHEREAS, Maintaining a healthy fund balance is good fiscal policy and it provides security in case emergency appropriations are needed or in the event that revenues do not materialize as projected, and

WHEREAS, The $2 Million Dollar fund balance goal has been in place for a number of years now and it has not been adjusted for inflation or to reflect the gradual growth of the General Fund Operating Budget, and

WHEREAS, The City auditors recommend that the City maintain a minimum reserve fund balance that is equal to six months or one half of the City’s annual General Fund Operating Budget, and

WHEREAS, The Council accepts this recommendation and wishes to implement it but also recognizes that implementing it immediately would be very expensive and could jeopardize other important fiscal priorities.

NOW THEREFORE BE IT RESOLVED, That the Homer City Council finds that maintaining a reserve fund balance in the General Fund equal to one half of the annual General Fund Operating Budget is sound fiscal policy and a worthy goal, and

BE IT FURTHER RESOLVED, That the Council hereby establishes a goal of meeting this objective in a gradual and phased approach over the next five years.

PASSED AND APPROVED, by the Homer City Council this 14^th day of August, 2006.

CITY OF HOMER

ATTEST: JAMES C. HORNADAY, MAYOR

MARY L. CALHOUN, CMC, CITY CLERK

Fiscal Note: Approximately $3 Million Dollars additional dollars to Fund Balance over 5 years ($600,000 every year on average)