Homer mayor proposes lowering city's required reserve to three months of expenses

Outgoing Homer Mayor Rachel Lord is bringing an ordinance to the Homer City Council on Monday that would replace the city's four-month emergency reserve requirement with a three-month minimum unassigned fund balance, applied across three city funds. The council is set to take it up for introduction at its 6 pm regular meeting, according to the meeting packet. Councilmember Donna Aderhold is a cosponsor.

City code now sets aside an amount equal to four months of general fund revenue, restricted to emergency use, according to the city's adopted FY26/27 budget. The ordinance would measure the new floor against each fund's budgeted operating expenses instead of revenue and extend it beyond the general fund to the enterprise fund and the special service fund. The ordinance says a minimum balance helps the city keep its creditworthiness, manage cash flow and respond to emergencies and revenue shortfalls.

"This is the only real substantive policy change within this ordinance," Lord wrote in her memo to the council. She wrote that the council has expressed interest in reducing the reserve and that 3-4 months of expenses "is a safe but not too conservative minimum calculation." Some Alaska municipalities set the minimum as low as two months and others as high as six, she wrote.

The council could spend below the floor only for a declared emergency or a significant revenue shortfall, and only with five votes. If the audited balance falls short at year's end, the city manager would have to present a plan to restore it within three fiscal years.

Most of the rest of the ordinance is code cleanup, Lord wrote, including renaming the Port Reserves fund to Port CARMA.

Lord's proposal was set for council discussion Oct. 26 but dropped off that day's agendas. At that meeting, Lord said she was sad the ordinance would not pass during her time as mayor and that she had passed the torch to Aderhold to carry it through.

Monday's meeting will also certify the Nov. 3 election results and swear in newly elected officials, including a mayor.