The City Council Monday gave unanimous approval to a plan to slow the growth of the primary general fund reserve account in the face of a looming budget shortfall.
The increase in the reserve for the general fund — which pays for basic municipal services such as public safety and recreation centers — was approved by the City Council last year.
The city planned to raise the reserves from 14 percent to 16.7 percent, in line with best practices, according to city Independent Budget Analyst Andrea Tevlin.
The city was going to boost the account 0.5 percent annually until it hit the target in fiscal year 2021. Under the newly approved plan, the hikes would be 0.25 percent every year, reaching the goal by fiscal year 2025.
Tevlin called it “a very reasonable option” based on the city’s new financial reality.
After a couple years of surpluses, expenses for the city government are expected to rise dramatically in the upcoming fiscal year, in part because of changes made by the board of the employee pension system that will require a much higher city financial contribution.
Mayor Kevin Faulconer has already called on city departments to find ways to reduce spending in the next budget.
City staff said slowing the increase in the reserve account will save about $3 million in the upcoming fiscal year.
Council members also supported a reduction in a workers’ compensation reserve account.
–City News Service