FY 23 Approved Budget Book

While the Committee recognizes the County’s obvious strength in the management of the debt service levels with regard to the General Fund, the Committee would be remiss in ignoring potential impacts to the General Fund from other sources. The Water and Sewer Operating Fund was established as a self-sustaining utility to provide for water and sewer services for Harford County. Revenue from users covers costs of providing these services. The County has taken steps to set rates at appropriate levels to ensure the General Fund will not have to bridge any shortfall in the Water and Sewer fund. The Committee supports the County in its efforts to continually review its Enterprise funds to ensure the enterprise is self sustaining and not dependent on the General Fund. The Committee reviewed the County's practice of maintaining an assigned fund balance of approximately five percent of the annual General Operating Fund Budget. This reserve holds funds that could be used by the County to fund revenue shortfalls or other emergencies. This fund balance is considered critical in maintaining an acceptable level of financial strength. Fiscally strong municipalities/counties are expected to maintain reserves in excess of the five percent reserve in order to maintain strong investment grade public debt ratings. These additional reserves can be in the form of restricted, assigned and/or unassigned. It is important for the County to communicate with the rating agencies periodically to understand their current thoughts on the level of reserves. The Committee is aware of the County Executive's practice of maintaining a minimum of $20.0 million in unassigned fund balance in addition to the 5% reserve. The Committee endorses maintaining this practice for a number of reasons. D. Fund Balance

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