Hendersonville committee amends fund-balance policy to cover special-revenue funds; resolution passes unanimously

The Hendersonville Finance Committee voted unanimously to approve an amendment to the city's fund-balance policy that adds a requirement for certain special-revenue funds to hold a two-month operating reserve (16.67%).

The amendment, offered as reading of resolution 2025-34, clarifies that the reserve target applies not only to the general fund but also to designated special-revenue funds such as State Street Aid, stormwater and the hotel/motel fund. "This amendment to the fund balance policy is really clarifying and adding a section that's specific to our special revenue funds," said Jamie, a staff member presenting the change. "With our approval letter for budget for this year from the comptroller's office, they recommended that our fund balance policy also include the recommendation for having the balance of 2 months or 16.67% of our operating budget in those."

Committee members asked which funds were close to the threshold. Jamie identified State Street Aid and stormwater as near depletion and said the hotel/motel fund was "very close." Jamie also said the drug fund currently meets the requirement. Committee members asked how the city will reach the threshold for funds that are under the target; Jamie said the policy, as drafted, calls for a plan to bring a fund into compliance over a three-fiscal-year period rather than requiring an immediate one-time transfer.

One committee member asked for a dollar estimate to reach the 16.67% threshold for stormwater; Jamie said the figure would need to be confirmed and offered to provide that estimate after the meeting. Another committee member noted the policy change does not alter reserves for other funds. After discussion, a committee member moved to approve the reading of resolution 2025-34 and a second followed. "All those in favor? Aye," the committee chair said; the motion passed unanimously.

The amendment responds to a recommendation from the state comptroller's office included with the city's budget approval letter. It is intended to ensure the city maintains sufficient short-term operating reserves in funds that pay for ongoing services, such as payroll or stormwater maintenance, to cover temporary shortfalls in revenue.

The committee did not set immediate transfers at the meeting; staff indicated compliance for funds below the target will be phased in over up to three fiscal years and that staff will supply the committee with the specific dollar amounts needed to meet the threshold for each affected fund.