Redlands Municipal Code Ch. 3.06 General Fund Reserve Policy

The city council of the city of Redlands acknowledges its responsibility to maintain a sufficient level of funds to provide for the continuation of city services to the community in the event of a natural disaster, downturns in the economy, the loss of economic resources to the city or any other fiscal emergency. The purpose of this chapter is to formalize the city council's desire to ensure sound financial management of the city by establishing a reserve fund policy for the city's general fund. (Ord. 2660 § 1, 2007)

It shall be the fiscal policy of the city council:

A. To adopt a balanced budget on an annual basis. For purposes of this chapter, a "balanced budget" is defined as a condition wherein total financial sources, excluding any available beginning fund balance and any established reserves, meet or exceed the total financial requirements of the city, excluding onetime capital expenditures. Except as otherwise provided for in this section, this "pay as you go" approach mandates that any increase in financial requirements, decrease in financial sources, or a combination of the two, that would result in a budget imbalance will require cost cutting and/or revenue enhancements, rather than spending reserves to support ongoing operations. Cost cutting measures may include reductions in capital expenditures, reductions in staffing levels, salaries and benefits through the negotiation process, or reductions in expenditures for equipment, supplies and services. Expenditure reductions may result in reduced service levels to the community.

B. To establish a reserve fund equivalent to a minimum of twelve percent (12%) of the general fund financial requirements. The term "financial requirements", for purposes of this chapter, is defined as the sum of approved operating expenditures and operating transfers out. Onetime (nonrecurring) expenditures shall not be used in the required reserve calculation.

C. That the city council may, by four (4) affirmative votes of its total membership, utilize the reserve fund described by this chapter only when faced with an unforeseen or uncontrollable event affecting the city's fiscal situation. Examples of an unforeseen or uncontrollable event include, but are not in any manner limited to, the following:

1. Federal or state budget cuts that financially impact the city;

2. Local revenue shortfalls due to a major business closure or relocation;

3. Legislative or judicial mandates to provide new or expanded services or programs; that in total will cost the city two hundred thousand dollars ($200,000.00) or more; and

4. Natural and civil disasters such as earthquakes, fires, floods, riots and health epidemics. (Ord. 2660 § 1, 2007)