City eyes reserve fund for disaster recovery|City Council expected to adopt a resolution setting aside $2 million

Published 3:23 am Sunday, November 8, 2009

Contributing Editor

Washington’s City Council, during its meeting Monday, is expected to adopt a resolution designating a minimum fund balance for the general fund and a reserve to provide funds for disaster recovery.
North Carolina’s Local Government Commission, which oversees the finances of county and municipal governments in the state, recommends that a local government maintain a minimum of two months’ operating expenses in its undesignated and unreserved general-fund balance. Because Washington is in a hurricane-prone region, city officials want to establish a $2 million reserve in the general-fund balance to help restore city services and operations until federal and state relief funds are received in the wake of a natural disaster.
“It just makes good sense to set a little aside so when those times come you can respond quickly and get things back up and running,” Mayor Judy Meier Jennette said Saturday.
Jennette said that even minor hurricanes result in damage to city services and infrastructure, including damage to the city’s electrical system, items that need to be either reinstated or repaired as soon as possible.
“We’ve always tried to keep money aside for that,” Jennette said.
Adopting the resolution would be a formalization of that policy, she added.
There’s another reason to have such a reserve in place, City Manager James C. Smith said Saturday.
“We recently had our bond rating upgraded. Having adequate reserves will help preserve that rating,” Smith said.
Smith said in addition to the Local Government Commission, other government watchdog agencies and organizations like the International City Managers Association recommend two month’s cash reserves, particularly for coastal communities, for disaster recovery.
For several years, the city has informally carried such a fund balance, he said.
“It’s really just a formalization,” Smith said about the resolution.
The resolution to be considered by the council includes the following provisions:
• The City Council recognizes that the unreserved/undesignated general-fund balance exceeds the two-month operating reserve recommendation provided by the Local Government Commission for similar-sized local governments by an additional $2 million for natural-disaster recovery.
• That excess funds are not restricted for a specific purpose and are available for general appropriation.
• The City Council may use the unreserved fund balance in the absence or delay of federal and/or state assistance during emergency situations such as those that may arise as a result of the city’s susceptibility to environmental hazards such as hurricanes and floods and Washington’s designation as a municipality governed by the Coastal Area Management Act.
Local governments may be reimbursed for some of their expenditures related to recovery efforts after natural disasters, but sometimes that reimbursement is slow to arrive, city officials said. Having reserve funds that would allow the city to begin recovery operations in the wake of a storm as it waits on federal and/or state assistance funds, city officials said.