Reserves can have a valid use in Municipal Budgeting !

New red truck under tree? is a posting indicating that the City has set aside in Fire Equipment Reserve the $670,000 waiting for council to approve the purchase of a new firetruck. Indeed at the start of the 2006 year after adding $230,000 to this Reserve the balance stood at $1,153,266.

This is a good use or Reserves and Reserve planning. When possible, reserves should be built up for future defined purposes that benefit the community and smooth out the tax burden over a number of years. Each year the most important part of the budget is the reexamination of Reserve Activity,purpose of the Reserve and the determination of amounts (if any) that should be committed for the general community good. They must not be allowed to exist just as another slush fund or "wiggle room" cookie jar. (Naturally I am talking about the discretionary reserves that predominate the City's Reserve List and not the Statutory ones required by legislation !)

An example of a possible reopening of an existing unused reserve comes about from the comments of Coun. Beardsell in Luxury condos for $100,000? Not likely. when he says, -Because of the up and down nature of the construction industry, Beardsell said council should also look at setting aside a reserve for permit revenue to save money for when permit revenue drops.

Now Council has $236,693 left over from 2004 in the Development Excess Fund which is what was left in the reserve after the Council sliced and diced $630,000 of unbudgeted fee revenue in 2006. This money was divided into $300,000 in Capital Grants Matching Res., $130,000 into a Social, Enviromental, Agriculture Studies Reserve and $200,000 into the Transit Expansion reserve.

Now it was the plan according to the 2006-2010 finacial plan to use $142,000 of this money in 2007 and the balance of $94,693 in 2008. For what purposes I have not yet found out but mayby to lower tax rates? (insert haha here !).

In response to Coun Beardsell's laudable foresight to set up a excess fee reserve I point him to a posting A first for Vernon budgets? in which we talk of an existing virginal Reserve, untouched since its birth in 1984 called the "tax Equalization Reserve".

QUESTION: What is a tax Equalization Reserve?

ANSWER: It is the taxpayer's equivalent of the Council Initiative Fund, Slush fund or the Mayor's "wiggle room" where the excess taxes or surpluses that had been collected from the year could be deposited. This fund which would benefit the taxpayers tax RATES has not been used since late 1984 when it was created to smooth out excessive rate increases in any one year.

The Council should commit to put the under budgeted building fees and others of the same ilk into this reserve each year to smooth out future taxes when revenues are more correctly forecast or even mis forecasted on the high side. The Council of the day can still remove these reserves and slice and dice them but the open audit trail would be more transparent and open to constructive public scrutiny.