(12/27) During the December 17 town meeting, Thurmont officials discussed the adoption of a new fiscal policy that would, in short, require the town to set aside a minimum amount of monies in two separate "rainy day" accounts. Thurmont’s Chief Financial Officer, Linda Joyce, presented the Board with a summary of the most recent audit to show where the town stood financially.

Joyce brought this proposal to the Board of Commissioners for initial discussion. The idea, according to Joyce, was to help ensure financial stability for the future of the town by establishing an emergency fund so the town wouldn’t have to pay for emergency projects out of the general operating budget. This new policy was designed to help keep the town from increasing taxes and minimizing their need to borrow money.

According to the recently completed audit, Thurmont currently has approximately $3.8 million in liquid unassigned assets, as seen at the end of the fiscal year. That $3.8 million is located the general fund, which comes from taxes and is used to service the town. Thus far, the town has been lucky enough to have not seen many true emergencies and has had enough operating expenses to be able to cover small emergencies when they have come up. However, the funds have never come out of a specific emergency account; this new policy hopes to change this for the future.

With this new policy, two designated funds would be created for emergencies only. A Fund Balance Reserve would require the town to maintain at least 12% of the unrestricted general fund audited expenditures excluding capital outlay expenditures. This will, hopefully, help alleviate unanticipated budget shortfalls and restore orderly provisions and services to town residents. The second fund, the Capital Reserve, the town must retain at least $250,000 in order to have guaranteed funds available for capital projects, provide funds for planned and anticipated projects and allow for completion of capital reserve projects.

As explained by Joyce, the Governments Finance Officers Association (GFOA) recommends that governments establish a formal policy on how much money from the general fund should be kept in a fund balance reserve. A fund balance reserve is used for operating expenses during emergencies. The GFOA recommends that they keep no less than two months of general fund operating expenses in the fund balance reserve. Based upon the current fund balance for Thurmont, $637,054 should be maintained in this fund. The Town currently has a year’s worth of unrestricted funds, noted Joyce. Mayor Kinnaird said that while it’s great the town has that amount in the fund already, he would like to see about one million dollars in the capital reserve fund to help fund emergency projects.

Commissioner Martin Burns stated that he believes that amount is far too low and that the town should have operating expenses set aside for an entire year. Mayor Kinnaird agreed there should be more money set aside for an emergency fund. "We could blink and there could be a $500,000 emergency, [but] I’m glad we can put more aside if we want to," stated Burns.

Burns continued by stating, "I always wanted to have three million dollars in the bank just for rainy day funds. [However] I think we need to have some rules set aside for what constitutes an emergency." Chief Administrative Officer Jim Humerick responded by explaining that the board would decide what constitutes an emergency when one comes.

Both accounts will be evaluated and addressed at the end of each fiscal year and the town will replenish both funds, if needed. The newly proposed policy would also mandate that if either fund dips below its minimum, the town would have five years to get it back up to its minimum balance. The proposal will be presented again, for comment by the general public and may be voted upon at the end of the month.