Auditors found Salt Lake City's FY2023 reserve broke the state's 35% cap; it has fallen nearly $60 million since

Salt Lake City's independent auditor reported that the city's general fund reserve exceeded the limit in state law for the fiscal year that ended June 30, 2023. ^[1]

Utah law says a city's general fund balance may not exceed 35% of the fund's total revenue for the fiscal period. ^[2]

The finding, numbered 2023-004, states: "The unrestricted general fund balance exceeded 35% of the total revenue of the general fund." The auditor classified it as an immaterial instance of noncompliance. ^[1]

The numbers

The city's fiscal 2023 report shows $178.9 million in unassigned general fund balance and total general fund balance of $202.6 million, against general fund revenue of $418.5 million. ^[3]

The city's 10-year table shows the general fund balance rising from $89.2 million in fiscal 2020 to $116.3 million in 2021, $160.1 million in 2022 and $202.6 million in 2023. ^[4]

The balance then fell to $172.9 million in fiscal 2024 and $142.9 million in fiscal 2025. ^[4]

The city's reports put unassigned general fund balance at 33 percent of general fund revenue in fiscal 2024 and 27 percent in fiscal 2025. ^[5][4]

The city's response

Management agreed with the finding and named the chief financial officer as responsible. ^[1]

Its corrective action plan said the Finance Department had put in place a monthly projection model for revenues and expenditures "to ensure that the City of Salt Lake won't be over the 35% unrestricted fund balance in the future," with completion expected in December 2023. ^[1]

The auditor's state compliance reports for fiscal 2024 and fiscal 2025 list fund balance among the requirements tested and report no fund balance finding. ^[6][7]

In fiscal 2025 the general fund took in $33.3 million more than it spent and transferred $73.1 million to other funds, for a net decrease of $30.0 million. ^[4]