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PORT CHESTER, N.Y. The Port Chester Board of Trustees unanimously approved a resolution Monday evening that sets the fund balance minimum for the village's general fund at 10 percent. A fund balance, as it's defined in the resolution, is "the difference between the assets and liabilities reported in a governmental fund."
The primary objective of the policy is to "maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees due to temporary revenue shortfalls or unpredicted one-time expenditures," the resolution said. Another benefit to building a solid fund balance is an increase in the village's credit rating.
According to Port Chester Mayor Dennis Pilla, the village's fund balance has grown from a 1 percent in 2002 to "well over 10 percent" in 2012. Pilla said he was "very proud" of the village and spoke about the importance of maintain a healthy fund balance.
"It's the accumulation of fund balance reserves, in part, that was one of the major reasons that the bond rating agencies increased the village's bond rating a bunch of times," Pilla said. "It is to protect and preserve that bond rating that, in part, we are having this discussion."
With the village's budget currently sitting at $33 million, the minimum fund balance figure the village can produce would be $3.3 million, Pilla said. The village currently has around $5 million set aside in the fund balance, according to Pilla.
Village Trustee Salverio Terenzi expressed reservations about the fund balance, but ultimately advocated for its approval.
"The only downside with doing this, and I'm in favor of doing this, is if we have a bad year and our fund balance goes below 10 percent and we're tied to 2 percent tax cap, it could be tough," Terenzi said. "It's a good idea, but just realize it's important that we keep our eye on the budget."
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