An increase in anticipated revenue for a known and recurring source may have what effect on the appropriation for the Reserve for Uncollected Taxes?

An increase in anticipated revenue from a known and recurring source typically leads to a reassessment of budgetary allocations within a municipality. Specifically, when revenue expectations rise, there is often less perceived need to maintain a high level of funds set aside for potential uncollected taxes. This is because an increase in anticipated revenue suggests that the municipality may be more confident in its ability to collect taxes, hence the expectation of a lower risk of uncollected taxes.

In this context, decreasing the appropriation for the Reserve for Uncollected Taxes (RUT) aligns with sound fiscal strategy. The municipality may choose to allocate funds elsewhere or reduce the reserve if they believe the risk of uncollected taxes is lessened due to the improved revenue outlook.

Understanding this relationship is crucial for any Certified Municipal Finance Officer, as prudent management of tax reserves directly affects the overall financial health and planning of the municipality.