Minot council deadlocks on revised fund-balance policy after hours of debate

The Minot City Council failed to adopt a revised fund-balance policy at its June 2 meeting after divided votes on an amendment and the main motion.

The council debated a proposed policy that would set a target range for the general fund's unrestricted fund balance and instruct staff to incorporate that range into multi-year budgeting. Finance staff described the proposal as replacing the current practice (described in the meeting as a 1/12 ordinance minimum and a previously adopted practice of 3/12) with a minimum and maximum percentage range for the general fund and guidance for other funds.

The proposal drew extended discussion on how reserves should be sized, how the policy would apply across different funds, and the effect on future budgets. Dave, the city's finance director, said the draft was intended to give the city leeway to plan for large capital projects and to align with professional guidance. He gave the police department remodel as an example of a known large future expenditure and said that reserve levels would rise while money was being saved for that project and then fall when the project spent the funds. He said the ordinance currently on the books requires a one-twelfth reserve but that the city's practice had been higher.

Aldermen split along familiar lines over whether to cap the policy's upper band. Alderman Mike Blessum proposed an amendment to set the general-fund band between 30% and 50% of the general fund, arguing that the city was holding more taxpayer money than necessary and that a lower upper bound would keep the council's decisions closer to current-year priorities. Other aldermen, including Olsen and Pitner, expressed concern that a lower cap would leave the city exposed to major unanticipated costs and weaken budgeting flexibility, citing a more than $17 million estimate for a police remodel discussed earlier in the meeting. Finance staff and other council members urged keeping a higher maximum to allow planning for large capital needs and to avoid frequent borrowing.

The amendment to cap the upper bound at 50% failed on a 3-3 vote. After continued discussion, the main motion to adopt the revised fund-balance policy as drafted failed on a 3-3 vote, so no new policy was adopted the night of June 2.

Council members said the discussion would continue in the budget process and that staff should present clearer, fund-by-fund impacts and longer-term projections before a new policy is adopted. Several council members also urged that excess year-end collections be returned to taxpayers or directed to prioritized needs during the annual budget process.

What happened: The council considered and voted on (1) an amendment to the proposed fund-balance policy and (2) the main adoption motion. The amendment failed 3-3; the main motion failed 3-3. No revised policy was adopted.

Why it matters: The fund-balance policy sets the city's target reserves and affects how much the city holds in unrestricted balances versus what is available to spend on services, capital projects, or tax relief. Council members cited differing priorities—conserving cash for large projects and emergencies versus returning funds to taxpayers or using them for near-term needs.

What's next: Staff will include more detailed, fund-level projections and options in the upcoming budget cycle; council members said they expect further discussion in the budget process.

Quotes

"That is the concept's purpose: to give us some latitude to save up for a large expenditure," the finance director said as he described the policy draft. "We have to be looking 3 or 4 or 5 or 10 years out in some cases to plan for that because we can't wait until the year before at budget time and have a huge project and not have the funding available for it."

"We should start drawing this back so that it makes our decisions tougher," Alderman Blessum said, urging a lower upper limit on reserves so tax money is not held unnecessarily.

Ending

Because council did not adopt a new policy, the city remains governed by the existing reserve ordinance and past practices. Council members asked staff to provide clearer fund-level analyses and long-range projections in the budget process so the council can revisit the policy with more detailed information.