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Resolution 24-XXX <br /> Fund Balance Policy <br /> City of Ramsey, Minnesota <br /> Effective December 31, 2024 <br /> Policy Statement <br /> The City of Ramsey recognizes the importance of maintaining appropriate fund balances as <br /> one component of sound financial management; and therefore, establishes this policy for the <br /> City's General Fund. The policy acknowledges that adequate fund balances represent a vital <br /> component of the City's overall financial management strategy, and serves to: <br /> • Mitigate the impact of future risks and unanticipated events <br /> • Sustain operations during economic downturns <br /> • Enhance creditworthiness <br /> • Stabilize funding for operations <br /> • Provide adequate resources for cash flow requirements <br /> • Moderate fluctuations in tax levies and user fees <br /> • Reduce the cost of debt <br /> • Provide an indication of the City's financial strength and flexibility <br /> A primary goal of the City funds is to provide basic dependable services that support the lives <br /> of citizens and businesses. These services include, but are not limited to, police and fire <br /> protection, street maintenance, ice and snow removal, traffic control, sidewalks and trails, <br /> building inspection, code enforcement, pedestrian and bicycle paths, and park facilities. <br /> Providing essential City services in a consistent manner requires some measure of financial <br /> stability and flexibility in order to manage the transition through economic challenges, <br /> varying stages and rates of growth, and changes in volatile revenues (such as state aids and <br /> permit revenues). Adequate fund balances represent one component of careful management of <br /> city budgets, tax levies, user fees, debt levels, long-term and short-term financial planning, <br /> and assessment of risk. <br /> Purpose <br /> There are numerous reasons for maintaining fund balances, and the reasons generally focus on <br /> cash flow needs and financial stability (flexibility and resiliency). Below is a brief discussion <br /> of the benefits and purpose of fund balances: <br /> • Working Capital (cash flow)—The timing of major revenue sources, in comparison to <br /> operating and capital costs, is an important consideration when establishing minimum <br /> working capital. Property tax receipts are received in July and December, and operating <br /> costs associated with essential services occur throughout the year. The result is that funds <br /> receiving property taxes must operate for the first half of the year without a major revenue <br /> source. <br /> 1 <br />