Outgoing Homer mayor proposes a new rule for how much money the city keeps in reserve

Outgoing Homer Mayor Rachel Lord will ask the City Council on Monday to change how much money the city must keep in reserve, at the same meeting where newly elected officials, including a new mayor, are sworn in.

Homer's code now requires the city to set aside an amount equal to four months of general fund revenue, to be used only for emergencies. Lord's ordinance, cosponsored by Councilmember Donna Aderhold, would replace that with a floor of three months of operating expenses.

The new rule would also reach beyond the general fund. Two other city funds, the enterprise fund and the utility and special revenue fund, would each have to keep three months of their own expenses on hand.

"This is the only real substantive policy change within this ordinance," Lord wrote in a memo to the council. The council has expressed interest in reducing the reserve, she wrote, and three to four months of expenses "is a safe but not too conservative minimum calculation." Some municipalities set their minimums as low as two months of expenses, and others as high as six, she wrote.

The ordinance says a minimum balance helps the city protect its credit, manage cash flow and handle emergencies and revenue shortfalls.

The council could dip below the floor only for a declared emergency or a significant drop in revenue, and only with five votes. If the city's audited books came up short at the end of a year, the city manager would have to present a plan to rebuild the balance within three years.

Most of the rest of the ordinance is cleanup, Lord wrote. It also renames the Port Reserves fund to Port CARMA.

The proposal was scheduled for the council's Oct. 26 meeting but dropped off that day's agendas. At that meeting, Lord said she was sad it wouldn't pass while she was mayor and that she had passed the torch to Aderhold to carry it through.

Monday's step is introduction, not a final vote.