UNDERSTANDING AGAR

Question

My PC sets it budget/precept  for the following financial year in about Dec . That must mean  as a part of build up process, that amounts are agreed for a) the year round budget plus b)  agreed amounts for the general  and Earmarked reserves.   The precept therefore serves the needs of these three "pots".  Why then does the Council review the level of reserves in about the following Feb.   Surely the levels are whatever the cash in the bank determines ??   Or is there a separate reason i.e.  for the end of year accounts that these levels need to be revised?

Answer 1

In February, you might have a clearer indication as to what will be left in your bank account at year end, rather than in December which is roughly half way through the year.

Comments

Yes I understand that  but of what relevance is it in Feb. If the NY budget/precept is set in December surely before that date is the time to review reserve levels ??

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I don't think here is a relevance, its just what your council does.  I cannot see any legal requirement for a February approval..  In my council, the budget and reserves policy is reviewed and approved in March after starting discussions in November the year before.  The precept has to be decided in January normally but that is at the request of the borough / district council.

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Thanks. Mrs A. I understand that the requirement to advise the precept must be based on best estimates but  if come the following March the budget has to be formalised/calendarized it can only be based on whatever is in the bank plus the precept . Come what may you can only move money around in the three pots .
As far as I can see there is no incentive to lower the general  reserves . Indeed I feel that it should set at a given sum rather than try and play politics with it (which I feel is happening in my case)

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Could be that the Feb date is governed more by the date which precept applications have to be with the overseeing authority for   them to set the council tax. You have a finance group who's job it is to estimate the budget to the best of their abilities and knowledge and experience. Normally it is the last bit that is missing