In managing the finances of the city we rely on a separate
fund as part of our general fund known as the Revolving Capital Fund. This fund allows for the keeping of funds ear
marked for specific purposes. By
separating out funds by purpose the city is able to manage expenditures with
the knowledge of how much is available for each use while keeping it separate
from the annual operating budget of the city.
Not only is this kept separate it allows for cash to be moved in and out
of this fund to deal with periodic major expenditures without budgetary swings. It also limits the need for debt
service.
At the end of each year the city makes a transfer to this
fund from the unspent capital funds in the general fund. Doing this accumulates resources in the
Revolving Capital Fund and eliminates the propensity to spend it or lose it as
the budget cycle comes to a close. The
transfers also deal with funds being moved from the Revolving Capital Fund to the
general fund to address needs or shortfalls in budgeting for capital
expenditures. Doing this also moderates
some of the ebbs and flows in a budget cycle.
At year end, when expenditures are known for the year, a
transfer resolution is presented to provide for these transfers of cash to
occur. This year the resolution was
adopted providing for a transfer out of the 2013 budget cycle $80,236 to be
placed in the Revolving Capital Fund.
$6,476 was moved from Revolving Capital to address budget
shortfalls. Other budgeted transfers
were also made from the sewer fund to the Sewer Capital Fund and Debt Service
Fund as required.
Managing funds in this way provides a great deal of
flexibility in operations. It provides
some transparency in what funds are available and for what purpose. Finally it provides greater security in
having reserves that meet certain purposes.
It maintains a level budget and
levy over the course of many years while accommodating needs for large
expenditures.
