This policy is to establish the formation and use of a stabilization fund that shall be used to reduce and/or eliminate spikes in tax increases, other operating rate increase or minimize effects of a decrease in revenues for future planning.
This stabilization fund shall be termed Revenue Stabilization Fund and this policy shall govern use of these funds.
The Revenue Stabilization Fund shall be utilized in a manner to give maximum benefit to the residents of King George County, while likewise ensuring that day to day operations of the County, as well as, King George County Public Schools are funded and cared for. The intent by this policy is to establish guidance for all King George County Boards of Supervisors and officials towards the use of the Revenue Stabilization Fund. The use of a formalized financial policy has been standard operating procedure for some governments for decades. It is a feature that nationally recognized rating agencies deem an enhancement to financial management of localities.
Existence of a stabilization fund provides a measure of financial flexibility to react to budget shortfalls in a timely manner while minimizing the need for short-run increases in taxes or other fees. In addition, use of this fund is not viewed as a credit weakness since that is its sole purpose, unlike use of General Fund Undesignated Fund balance.
In preparing the annual budget, the County will reserve in a separate fund the amount equal to one penny ($.01) on the real estate taxes or the amount necessary to maintain the stabilization fund at 3% of the adopted General Government budgeted operating revenues which shall include the General Fund, on-going revenues in Capital Projects Fund, the School’s Operating Fund, Cafeteria Fund, and any other Operating Transfers that are accounted for in the General Government Funds.
b.) At the close of each fiscal year the County will “true up” the Revenue Stabilization Fund by transferring such amounts as may be necessary to bring the balance to at least 3% of the General Governmental operating revenues, as defined in A.
above, for the upcoming fiscal year.
Use of Funds
Use of the Revenue Stabilization Fund is restricted to times of severe financial distress or unplanned fluctuations in revenues or expenditures, as approved by the Board of Supervisors, such as:
Revenue shortfalls due to reductions in funding by the State/Federal Government;
Consumer or business related tax revenue shortfalls (i.e. sales tax, meals tax, BPOL) due to general economic recessions;
Revenue shortfalls due to severe reductions in property value assessments;
Loss of a major tax payer, major employer, or a general erosion of the King George County’s demographics, etc.
Unexpected expenditures related to emergency situations such as natural disasters, severe weather related events, etc;
Compliance with Regulatory requirements; and,
Declared financial emergencies.
Request for use of funds must be presented by the County Administrator with a plan and timeline to replenish the reserves fund and approved by the Board of Supervisors