*Update the Fund Statement of Purpose for the Recreational Cannabis Tax Fund to allow the City Budget Office to establish set aside funds for an operating reserve policy
The City of Portland ordains:
Section 1. The Council finds:
- City Comprehensive Financial Management Policy 2.04 states that each fund in the City shall have a statement of purpose, adopted by ordinance of the City Council, which contains several required elements (outlined in FIN 2.04.01).
- City Comprehensive Financial Management Policy 2.07 states that “Reserve funds that formally set aside amounts for use in emergency situations or revenue shortfalls are considered ‘stabilization arrangements’ under Government Accounting Standards Board (GASB) guidance.”
- City Comprehensive Financial Management Policy 2.07 states “Amounts set aside in reserve funds to provide temporary coverage in the event of a cash or revenue shortfall, or a negative fund balance at fiscal year-end, are considered routine in nature, and may be treated as “committed” or “assigned” segments of ending fund balance. The City shall maintain adequate cash reserves in each fund to maintain a positive cash position and ending fund balance at year end.”
- The Recreational Cannabis Tax Fund does not currently have a reserve fund, exposing it to risk associated with revenue shortfalls and negative year-end fund balances.
- In an Adopted FY 2023-24 Budget Note, Council directed the City Budget Office to develop a reserve policy for the Recreational Cannabis Tax Fund.
NOW, THEREFORE, the Council directs:
- The Fund Statement of Purpose for the Recreational Cannabis Tax Fund (Fund 227) is amended as shown in Exhibit A. The amended Fund Statement of Purpose is binding City policy.
Section 2. The Council declares that an emergency exists in order to have the ordinance as amended be enacted upon the unanimous passage of this ordinance; this Ordinance shall be in full force and effect from and after its passage by the Council.
Official Record (Efiles)
An ordinance when passed by the Council shall be signed by the Auditor. It shall be carefully filed and preserved in the custody of the Auditor (City Charter Chapter 2 Article 1 Section 2-122)
Passed as amended by Council
Auditor of the City of Portland
Simone Rede
Impact Statement
Purpose of Proposed Legislation and Background Information
In an Adopted FY 2023-24 Budget Note, Council directed the City Budget Office to develop a reserve policy for the Recreational Cannabis Tax Fund. This reserve policy will stabilize ongoing programming funding.
Financial and Budgetary Impacts
This policy will results in a Cannabis Reserve program set at ten percent of the Cannabis Fund resources less beginning fund balance. In the event of a forecasted decline in revenues, this reserve will be reduced prior to reductions to other ongoing programs. Additionally, there will be no new allocations of revenue unless the Cannabis Reserve meets the ten percent threshold. There are no other financial or budgetary impacts.
Community Impacts and Community Involvement
Not applicable.
100% Renewable Goal
Not applicable.