Cranbrook city council has approved a new reserves and surplus policy, which provides a framework and guidance for long-term municipal finance planning activities, according to a staff report.
The new policy focuses on providing long-term financial stability, predictable tax levies, contingencies for operating emergencies, safeguarding and maintaining existing assets and financing new capital assets. In addition, the policy will direct the allocation of any surplus funds a prioritized pool of various reserve funds.
“I think this is a very important step in the city’s intent to move forward with a priority-based budget system,” said Coun. Wayne Price, during a meeting on Monday night. “It’s quite complex and this is a major link and a really good starting point.”
Currently, the city has a number of long-standing reserves where the purpose and funding sources aren’t well defined, nor align with the city’s financial plan. The new policy will also eliminate small balances and consolidate some specific purpose-like reserve.
By consolidating and realigning some of the reserves, the city hopes to ensure appropriate funds are set aside for emergencies, opportunities and maintaining municipal assets. Currently, the city has approximately two dozen individual reserves, excluding surpluses, which are being consolidated down to 12, according to Charlotte Osborne, the Director of Finance.
Having numerous reserves dedicated to specific funding priorities — instead of pulling from one large general reserve fund— ensures proper financial oversight so that the city can track and meet those priorities, Osborne told council.
The policy will be annually reviewed as part of the city’s budgeting process.
“It’s nice to have the policy in place and particularly as we head into the future, but truly, my feeling has been that the city has been very well run financially,” said Coun. Norma Blissett. “…Certainly, the public interest was well protected and has been for a long time before this council came into being.
“But it is good to have a policy in place heading into the future.”
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