Council adopts revised city fund‑balance policy to set 30% general‑fund reserve target

The Newport City Council voted Oct. 8 to adopt a revised fund‑balance policy that establishes a 30% target for the unassigned general fund balance and directs any remaining surplus above that target into a committed fund balance for one‑time uses such as capital projects.

Finance Director Jim Nolan told the Council the city’s unassigned fund balance at the close of fiscal year 2024 was roughly $34 million, near 30% of general‑fund expenditures, and that preliminary fiscal‑year‑2025 investment earnings exceeded the city’s conservative budgeted projection. Under the adopted policy the city will maintain the 30% “rainy day” reserve; remaining surplus after that target is met will be committed by Council action to specific purposes.

Councilors asked how much money would move into the committed fund balance. Nolan said, subject to final audit entries, the initial excess between the 30% target and current balances was roughly $5.9 million; under current budget projections the city expects to increase unassigned fund balance toward the 30% target and have approximately $3 million available to commit for one‑time uses, though those numbers were described as preliminary while close‑out entries and audits finish.

Councilors discussed the policy’s effect on bond ratings and on taxpayers. Finance staff said the Government Finance Officers Association’s guidance (minimum 10% of revenues) is lower than the 30% target adopted; staff and financial advisers said the policy should be viewed favorably by rating agencies because it formalizes reserve levels and creates a committed fund for capital uses.

The Council approved the policy on a voice vote with no recorded opposition.

Ending: Staff said the committed fund will be available for one‑time projects by Council action and that the administration will return with more detailed accounting after audit close‑out.