FY 24 APPROVED OPERATING BUDGET

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: First, the five percent assigned balance, and additional reserves, helps to ensure healthy County operations and services during recessionary conditions or due to unexpected shortfalls in revenue. Recent years have proven to be difficult times in which to manage County Government. The wisdom of conservatively managing expenditures and planning for the possibility of economic downturns, or other uncontrollable and unexpected economic forces in recent years, has allowed for steady and consistent operation. Second, the fund balance contributes to Harford County's enviable bond ratings, which are especially important in lowering the County’s borrowing costs. In rating the County's creditworthiness, the rating agencies will review the fund balance when assigning their debt ratings. They will view a county with strong reserves more favorably. A. General Fund Budget Based upon our review and analysis of procedures already outlined, the Committee recommends that the FY 2024 General Fund Budget increase the FY 2023 Net Adjusted General Fund Budget, of $663.0 million, by 2.5%. This represents approximately $679.6 million in ongoing revenues for FY 2024. Note, based on the current state of the economy, the Committee was concerned over the impact of inflation as well as recession on income tax revenues. The continued strong growth in withholding coupled with a reduction in estimated payments led to a discussion of an uneven economy, whereby III. Recommendations

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