Monday morning Roanoke City council heard solidified changes to Roanoke’s reserve and debt policy. The Director of Finance, Ann Shawver presented policy changes that set the Undesignated Fund Reserve at 10% of revenue – an increase from the 8% high water mark. This fund would only be used if the absolute worst happens,” said Shawver. This fund will max out in the $25 million dollar range.
Roanoke “is not subject to flooding or hurricane events like some other entities,” said Shawver, explaining why 10% is sufficient
“We only get hamstrung about creating bigger reserves when we’ve got budget challenges … had we had more in the reserves when we went through the very difficult recessionary time it might have given us more flexibility,” remarked Shawver.
After reaching the peak in the Undesignated Fund Balance, Shawver recommended a new fund naming it the Economic Downturn Reserve. “This reserve would grow up to 5% of our budget,” said Shawver. This would peak at about $12 million. It would not be used unless revenues dropped at least 1 ½ percent. Only half of the reserve could be used at a time.
The budget option will not start until the Undesignated Fund reaches its peak which could stretch out to 2016.
The policy for capping the city’s debt at 5 percent of assessed value of real estate was recommended to be further restricted to 4 percent. The debt policy will remain at 10 percent of the General and School Fund expenditures. It exceeded the policy for fiscal year 2010 at 10.2 percent. Shawver cautioned that current debt will remain precariously close to the 10 percent limit until year 2015. Any additional downturn in revenue could quickly reduce the limited buffer.
The new reserve and debt policy was adopted at the 2 p.m. council meeting.
The Economic Development Reserve will be retained. The Commonwealth Building sale had just closed on Monday which adds $3 million to the reserve.
Other topics at Monday morning’s briefing included an update from Roanoke City Manager, Chris Morrill on Budgeting for Outcomes. There are seven teams with up to 10 members each, including city staff. Each team addressed Roanoke’s livability, infrastructure, safety, economy, human services, education and good government.
Council members also heard the first dusting of the five-year Capital Improvement Program cycle for fiscal years 2012 through 2016. Council members will set priorities in future meetings related to libraries (on Peters Creek road), civic facilities maintenance, school capital maintenance (HVAC and plumbing), market garage retail space build out, courthouse expansion, amphitheater, greenways, storm drains, bridges, curbs and sidewalks, streetscapes and VDOT highway projects.