Number
010851
Version
SUBSTITUTE 1
Reference
Sponsor
THE CHAIR
Title
A substitute ordinance relating to the tax stabilization fund.
Sections
304-29 rc
Analysis
This ordinance, relating to the tax stabilization fund, (TSF) repeals provisions relating to use of the fund (to keep tax rate increase under 3%; to use no more than 50% of the fund balance) and establishes new provisions to maintain an unrestricted TSF fund balance between 5 to 10% of the city's previous 3-year average with respect to general budget fund expenditures:
1. If the fund falls below 5%, the annual draw would be limited to 95% of the previous year's fund regeneration.
2. If the fund falls between 5% and 7.5%, the annual draw would be limited to previous year's fund regeneration.
3. If the fund falls between 7.5% and 10%, the annual draw may exceed previous year's regeneration as long as the projected year end balance does not fall below the 5% guideline.
4. If the fund exceeds 10%, a draw must be made to maintain the balance at 10%. However, the use of fund proceeds (above the 10% level) must be used to increase cash financing of city capital projects, or other one-time initiatives designed to strengthen city finances. (i.e. pre-pay debt).
In addition, this ordinance makes non substantive revisions to the code text of the TSF (s.304-29) which generally dates to 1965.
Body
Whereas, The Government Finance Officers Association recommends that general purpose governments maintain an unreserved fund balance of no less than 5 to 15% of regular general fund operating revenues; and
Whereas, Because the City of Milwaukee's revenue stream is fairly stable (with the exception of state government attempts to eliminate or seriously decrease shared revenue), and the fact that the City has a separate reserve fund-the Public Debt Amortization Fund-for city debt, maintaining a Tax Stabilization Fund (TSF) balance of 5 to 10% of regular general fund operating revenues is app...
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