Two rainy day accounts set up at the District of Houston

The District of Houston has set up the equivalent of two rainy day accounts to better safeguard it and taxpayers from the financial demands of disasters and economic downturns.

The emergency fund and the revenue stabilization fund both contain $1.65 million using money taken from a general reserve that has been accumulating over the years.

Bylaws setting up the funds were introduced late last year and formally adopted in early January, just weeks ahead of Canfor announcing it was shutting down its sawmill here.

Houston mayor Shane Brienen has already referred to the two funds as a sign to residents that the District will be able to carry on with needed services.

The creation via two bylaws follows a review of the District’s existing reserve accounts and how surpluses are handled and allocated.

“In the past the District had six reserves established by bylaw with a large amount of the funds in the accumulated surplus account with no directive as to its use,” wrote finance director Jennifer Larson in a detailed memo.

“Many of the existing reserves are old and lack details as to the intent of the use of the funds.

“Additionally, over the years the accounting for years has become confused by multiple accounts representing each reserve and some accounts created that were meant to set aside funds for a specific purpose but for which no reserve has formally been established.”

In addition to the emergency fund and the revenue stabilization fund, the District also created a parkland acquisition reserve, a development cost charge reserve, a highway access to water reserve, a parking space reserve and a land reserve to better account for monies meant for those purposes and to meet legislative requirements.

The emergency fund is described as ready for use for “significant legal costs/claims, insurance claims/deductibles, significant natural disasters such as floods and wildfires, inclement weather, environmental hazards and the like.”

And the revenue stabilization fund would offset either cyclical revenue downturns and/or operating cost increases “to offset revenue shortfalls instead of needing to increase tax rates or reduce services.”

Even with the two new funds, $3.73 million would be left for non-capital expenditures and $3.5 million left in the accumulated surplus that represents six months of operating expenses if there was an unforeseen revenue shortfalls.

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