Sec. 7-359. Definitions. When used in this chapter, "municipality" means any
town, city or borough, whether consolidated or unconsolidated, and any fire district,
and "budget-making authority", as applied to towns, cities and boroughs, whether consolidated or unconsolidated, having boards of finance or other bodies charged with
preparing the budget, means the board of finance or such other body; as applied to towns
having no boards of finance, means the board of selectmen; as applied to fire districts,
means the district committee. Sec. 7-360. Creation of fund. Upon the recommendation and approval of the budget-making authority, the legislative body of any municipality, by a majority vote, may
create a reserve fund for capital and nonrecurring expenditures. Such fund shall thereafter be termed "reserve fund for capital and nonrecurring expenditures". Sec. 7-361. Procurement of fund. Upon the recommendation of the budget-making authority and approval by the legislative body, there shall be paid into such reserve
fund (a) amounts authorized to be transferred thereto from the general fund cash surplus
available at the end of any fiscal year, (b) amounts raised by the annual levy of a tax
not exceeding four mills for the benefit of such fund, and for no other purpose, such tax
to be levied and collected in the same manner and at the same time as the regular annual
taxes of the municipality or (c) surplus cash funds already held in reserve and available
for such capital or nonrecurring expenditures as are contemplated by the terms of section
7-364. All money so accumulated, as hereinbefore provided, together with all interest
that accrues thereon, shall be deposited in a separate bank account by the treasurer of
the municipality. Sec. 7-362. Investment of fund. The budget-making authority may, from time to
time, direct the treasurer to invest, such portion of such fund as in its opinion is advisable,
provided: (1) Not more than thirty-one per cent of the total amount invested shall be
invested in equity securities; and (2) not less than fifty per cent of the total amount
invested shall be invested in the stock or bonds or interest-bearing notes or obligations
of the United States, or those for which the faith of the United States is pledged to
provide for the payment of the principal and interest, including the bonds of the District
of Columbia. Sec. 7-363. Report of treasurer. The treasurer shall annually submit a complete
and detailed report of the condition of such fund to the budget-making authority and
such report shall be made a part of the annual report of the municipality. Sec. 7-364. Use of fund. Upon the recommendation of the budget-making authority and approval by the legislative body, any part or the whole of such fund may be used
for capital and nonrecurring expenditures, but such use shall be restricted to the financing
of all or part of the planning, construction, reconstruction or acquisition of any specific
capital improvement or the acquisition of any specific item of equipment. Upon the
approval of any such expenditure an appropriation shall be set up, plainly designated
for the project or acquisition for which it has been authorized, and such unexpended
appropriation may be continued until such project or acquisition is completed. Any
unexpended portion of such appropriation remaining after such completion shall revert
to said reserve fund. Sec. 7-365. Termination of appropriation. If any authorized appropriation is set
up pursuant to the provisions of section 7-364 and through unforeseen circumstances
the completion of the project or acquisition for which such appropriation has been designated is impossible of attainment, upon recommendation of the budget-making authority
and approval by the legislative body, such appropriation shall terminate and no longer
be in effect. Sec. 7-366. Appropriation when reserve fund insufficient. If, in the opinion of
the budget-making authority, such reserve fund is insufficient to meet the cost of any
capital or nonrecurring expenditure which it deems immediately necessary, it may, with
the approval of the legislative body, authorize that an appropriation be made therefor,
provided the total of such fund and the sum anticipated from a tax collected for the
purposes of sections 7-360 to 7-364, inclusive, in the year following the date when such
authorization is made is estimated by said budget-making authority to be sufficient to
meet such expenditures. Nothing in said sections shall prohibit a municipality from
supplementing said reserve fund to meet the cost of capital or nonrecurring expenditures
by issuing bonds in accordance with the applicable provisions of the statutes. Sec. 7-367. Amount of fund not to exceed current tax levy. No payments shall
be made to the reserve fund as provided for in section 7-361 which will cause the amount
of such fund to exceed the current tax levy of the municipality, except for the addition
of interest and dividends earned by such fund except in the case of any fire district or
consolidated or unconsolidated borough, no such payments shall be made which will
cause the amount of such fund to exceed three times the current tax levy of such fire
district or borough excluding the addition of interest and dividends earned by such fund. Sec. 7-368. Discontinuance of reserve fund. Said reserve fund may be discontinued, after recommendation by the budget-making authority to the legislative body
and upon approval of said body, and said fund shall be converted into, or added to, a
sinking fund to provide for the retirement of its nonserial bonded indebtedness. If the
municipality has no bonded indebtedness, such fund shall be transferred to the general
fund of the municipality.
(1949 Rev., S. 792; 1957, P.A. 13, S. 37.)
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(1949 Rev., S. 793.)
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(1949 Rev., S. 794; P.A. 91-103.)
History: P.A. 91-103 increased the maximum annual levy from two to four mills.
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(1949 Rev., S. 795; P.A. 93-46, S. 2.)
History: P.A. 93-46 amended section to clarify the portion of reserve funds which a municipality may invest in equity
securities.
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(1949 Rev., S. 796.)
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(1949 Rev., S. 797.)
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(1949 Rev., S. 798.)
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(1949 Rev., S. 799.)
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(1949, Rev., S. 800; 1971, P.A. 716; P.A. 99-205, S. 1, 2.)
History: 1971 act added exception concerning fire districts; P.A. 99-205 added exception concerning consolidated or
unconsolidated boroughs, effective July 1, 1999.
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(1949 Rev., S. 801.)
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