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Board adopts revised utility financial policy to base reserves on prior-year expenses
Summary
The board adopted Revision 5 of county financial policies to calculate water/sewer fund reserves as 50% of prior-year operating expenses (with a $3 million minimum), freeing modest cash for capital projects and lending flexibility.
The New Kent County Board of Supervisors voted Feb. 9 to adopt Revision 5 of the county’s financial policies, changing the calculation for system reserves in the water and sewer funds.
Mr. Lawrence told the board the revision retains a $3 million reserve floor but switches the measurement from 50% of operating revenue to 50% of prior-year operating expenses. Lawrence said this approach provides a more accurate reflection of needs to maintain services, and would free up cash for capital projects and reduce the amount the utility must borrow.
Supervisors discussed the methodology and accepted that basing reserves on expenses is standard practice; the board then moved and adopted the revision by recorded vote.
