Fiscal Policy

Fiscal Policy

City Manager Gregg G. Guetschow addressed the City Council regarding the intent of the proposed fiscal policy and the budget stabilization fund.  There was general Council discussion regarding the proposed policy.

Whereas, the Council, after due and legal notice, has met and heard all interested persons, motion by Councilperson Robertson that the following ordinance repeal and the amendment of R-33-96 Fund Balance Policy, be adopted:

ORDINANCE NO. 669

AN ORDINANCE TO REPEAL CHAPTER 2, ADMINISTRATION, ARTICLE VI, FINANCE, DIVISION 2, BUDGET STABILIZATION FUND, OF THE CODE OF ORDINANCES OF THE CITY OF OWOSSO, MICHIGAN.

THE CITY OF OWOSSO ORDAINS:

Section 1.  That Division 2, Budget Stabilization Fund of Article VI, Finance, of Chapter 2, Administration, of the Owosso City Code shall be and the same is hereby repealed.

Section 2.   This ordinance shall take effect July 10, 2005.

Section 3. This ordinance may be purchased or inspected in the City Clerk’s office Monday through Friday between the hours of 9:00 a.m. and 5:00 p.m.

RESOLUTION

WHEREAS, on October 21, 1996, the Owosso City Council adopted Resolution R-33-96 establishing a fund balance policy for the general fund that provided for maintaining an unreserved, undesignated fund balance equal to twenty percent of the current general fund operating budget, a designated reserve of $100,000 to be used for special assessment defaults related to environmentally contaminated property, and a designated reserve of $500,000 to be used to advance funds for economic development projects; and

WHEREAS, the reasons for adopting Resolution R-36-96 as stated in the resolution are still valid but changes in state-local fiscal relations and in local circumstances warrant further expansion of funds reserved for specific purposes; and

WHEREAS, the City Council has adopted Ordinance No. 669 that repeals the ordinance through which the City established and maintained a budget stabilization fund; and

WHEREAS, Public Act 177 of 1943 permits municipalities to establish public improvement funds for the purpose of appropriating, providing for, setting aside and accumulating moneys to be used for acquiring, constructing, extending, altering, repairing or equipping public improvements or public buildings; and

WHEREAS, the City will be making payments for costs associated with the construction of the Owosso Drain; and

WHEREAS, the myriad factors affecting the City’s budget warrant a fiscal policy that provides for the prudent use of undesignated, unreserved funds and funds that were formerly included within the City’s budget stabilization fund so as to meet the need for funds for the Owosso Drain payments and future capital improvements as well as for unforeseen emergencies; and

NOW, THEREFORE, BE IT RESOLVED, that Resolution R-33-96 is hereby amended to provide that the unreserved, undesignated fund balance in the general fund shall be maintained at an amount equal to twenty-five percent of the average of general fund expenditures based on a three-year moving average; provided, however, that the amount of this fund may be reduced upon Council approval during any fiscal year in order to meet the need for continuing funding for City operations when unforeseen emergencies such as natural disasters, reduction in funds from other revenue sources, and the like occur; and

BE IT FURTHER RESOLVED, that an additional designated reserve is hereby established in the initial amount of $282,785 in order to provide for payments associated with the Owosso Drain project; and

BE IT FURTHER RESOLVED, that, pursuant to Public Act 177 of 1943, there is hereby established a public improvement fund in the initial amount of $844,628 to be used, subject to Council approval, for the purposes provided in the act.

Motion supported by Councilperson Horvath.

Roll Call Vote.

AYES:              Councilpersons Robertson, Owen, Horvath, Sumrack, and Mayor Davis.

NAYS:              None.

ABSENT:          Mayor Pro-Tem Osika and Councilperson Ford.

I hereby certify that the foregoing is a true and complete copy of a resolution adopted by the Owosso City Council at their regular meeting on June 20, 2005.                                                                       ____________________________________                                                                        Gail L. Schultz, CMC
City Clerk