In the Nov. 7 Dispatch, referring to Measure F, Mayor Don Gage was quoted as saying “there are a significant number of issues we don’t have the money to fix.”
Several years ago, I understood that the city of Gilroy had a reserve fund that had millions of dollars in it. Do you know if that fund still exists and how much is in it? If it does exist do you know what the stipulations are regarding the use of the funds?
Red Phone:
To answer your question, good caller, the city of Gilroy currently has just over $10.5 million in reserves. In May of 2010, the City Council adopted a policy that requires setting aside funds for a rainy day for a wide range of reasons—from covering unbudgeted, one-time costs to running the city in the event of a major catastrophe.
At minimum, the city sets aside 25 percent of its entire operating expenses each year and that funding is unrestricted—which means it can be used to cover anything from unexpected, unbudgeted costs or if expenditures temporarily exceed revenues. The practice provides the city a security blanket. It’s a means of covering Gilroy’s operating expenses for at least three months, according to the policy.
Additionally, the policy requires the city place 15 percent of all General Fund expenditures in a separate economic stability reserve account reserved only for “extraordinary circumstances,” the policy reads. That funding is much more restricted than the other category of reserves, as prescribed by the Council’s adopted policy.
It would take a majority vote of the City Council to spend any of the economic stability funding, and economic triggers—like a large drop in property taxes, major business closures or state take-away of significant revenue, for example—will need to be met. If the economic stability reserve is used, the city must replenish the reserve by the end of the next biennial budget to 15 percent of all General Fund expenditures for a given year, the policy reads.
For more information, visit cityofgilroy.org/cityofgilroy_files/city_hall/finance/GeneralFund_03-12.pdf.
