By Mario Conde
The Calexico City Council approved at its regular Tuesday meeting the approval of the General Fund Contingency Reserve Fund.
At the request of finance director Judy Hashem, the Contingency Reserve Fund was re-established to be prepared for anticipated emergency situations such as natural disasters. Hashem said that healthy reserves help cushion revenue losses in lean times and allow the City to adjust spending without significant service reductions.
This reserve was created without a formal policy in Fiscal Year 1980-81 by initially depositing $310,000 as a reserve for critical short and long-term financial stability of the general fund. In 1981-82 $665,000 was transferred to the reserve for a total of $975,000. However, in fiscal year 1986-88 $590,000 was transferred to the general fund operations to cover the operating shortfalls.
Then in 1993-94 the City began depositing 5% of sales revenues in the Contingency Reserve Fund to increase the reserves. But in fiscal year 1995-96 the practice was discontinued because of a general fund shortfall. As of December 2010, there is a $1.21 million dollars on the contingency reserve.
“The goal is to stabilize the general fund, by reserving sufficient resources to ensure that during a crisis, the City can be responsive and continue to provide services an pay its obligations. Natural and fiscal emergencies create a significant fluctuation in cash flow requirements that the City must be prepared to address.” Hashem said.
In a related item, the council also appointed new members to the Financial Advisory Board. The board was created in 2008 by Councilman Daniel Romero as a way for them to give recommendations to the Council and RDA on fiscal matters. The commission was discontinued afterwards but was requested by Councilwoman Hurtado to come back and fulfill its duties and help with the current financial situation.
The board studies, investigates and advise the Council on budgetary issues and adoption of the yearly budget; to oversee department spending; to provide with a financial plan for the City and to review City/RDA financial partnerships when requested. The board will be composed of Carlton Hargrave, Oscar Gonzalez, Yolanda Cordero, Joe Moreno, and Arturo Encinas.