Edinburg reinstates depreciation reserve policy for water and solid‑waste funds
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Summary
The council approved ordinances to add a depreciation reserve for both the water and solid‑waste funds, directing the city to budget a reserve equal to 5% of the average of the last four audited depreciation expenses to fund future major equipment or infrastructure purchases.
Edinburg — The City Council on July 1 approved two ordinances establishing a depreciation reserve for the water fund and for the solid‑waste fund, directing staff to budget a regular annual reserve to reduce reliance on bonds for major equipment and capital repairs.
Sierra Alto, the city’s director of finance, told the council the proposed policy sets aside the depreciation reserve at 5% of the average of the last four audited depreciation expenses. “This will be setting aside 5% of the average of the last 4 audited depreciation expense,” Alto said, explaining the calculation and the reason for reinstating the fund. Council members said the reserve was previously authorized in 1988, was repealed in 2018 and that restoring the reserve should reduce the need for debt for unanticipated capital replacements.
Council approved both ordinances by voice vote. Officials said the funds had been depleted after being repealed in 2018 and that restoring a depreciation reserve will help cover heavy equipment and infrastructure repairs without issuing bonds.
Why it matters: Establishing dedicated depreciation reserves directs the city to plan and save for long‑term equipment replacement and infrastructure needs, which can reduce unplanned borrowing and improve fiscal stability.
What changed: The city’s finance department will include the depreciation reserve in annual budgets at the specified formula and will use the reserve for major purchases and repairs in the respective enterprise funds.