CHAPTER 108
MUNICIPAL RESERVE FUND

Table of Contents

Sec. 7-359. Definitions.
Sec. 7-360. Creation of fund.
Sec. 7-361. Procurement of fund.
Sec. 7-362. Investment of fund.
Sec. 7-363. Information re fund.
Sec. 7-364. Use of fund.
Sec. 7-365. Termination of appropriation.
Sec. 7-366. Appropriation when reserve fund insufficient.
Sec. 7-367. Amount of fund not to exceed current tax levy.
Sec. 7-368. Discontinuance of reserve fund.

      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.

      (1949 Rev., S. 792; 1957, P.A. 13, S. 37.)

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      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".

      (1949 Rev., S. 793.)

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      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.

      (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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      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.

      (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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      Sec. 7-363. Information re fund. The treasurer shall annually make available information and data on the condition of such fund to the budget-making authority and to the public and such information and data may be made a part of the annual report of the municipality.

      (1949 Rev., S. 796; P.A. 06-122, S. 1.)

      History: P.A. 06-122 replaced provision re report with requirement that information and data on fund be available to the public.

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      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.

      (1949 Rev., S. 797.)

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      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.

      (1949 Rev., S. 798.)

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      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.

      (1949 Rev., S. 799.)

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      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.

      (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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      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. 801.)

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