The Town of South Berwick recognizes the importance of maintaining
an appropriate level of undesignated fund balance. After evaluating
the Town's operating characteristics, diversity of tax base,
reliability of non-property tax revenue sources, working capital needs,
impact on bond rating, state and local economic outlooks, emergency
and disaster risk, and other contingent issues, the Town establishes
the following goals regarding the undesignated fund balance of the
General Fund for the Town of South Berwick, Maine.
The level of fund balance that the Town strives to maintain
as undesignated is an amount equal to 10% of the Town's General
Fund budget plus an amount equal to one month's operating expenses
from the then-current operating budget.
Once the Town achieves its goal of an appropriate level of undesignated
fund balance, any excess funds may be utilized for other municipal
fiscal purposes, including, without limitation, additional capital
improvement needs or tax rate stabilization or reduction purposes.
For example, by utilizing excess fund balances for capital improvements,
the Town will reduce the need to incur long-term debt and will avoid
creating an operating funding gap in subsequent fiscal years.
This policy has been adopted by the Town to recognize the financial
importance of a stable and sufficient level of the undesignated fund
balance. However, the Town reserves the right to appropriate funds
from the undesignated fund balance for emergencies and other requirements
the Town believes to be in the best interest of the Town.