Reserve funding refers to using accumulated reserve funds to pay for capital projects or other approved expenses. When municipalities have sufficient reserves, they can fund projects without borrowing—avoiding interest costs and debt. Capital projects might be partially reserve-funded and partially debt-financed, depending on available reserves and project size. Reserve funding is typically authorized through budget processes, with council approving withdrawals for specific purposes. Using reserves reduces balances, requiring eventual replenishment. The decision to use reserves versus borrowing considers current reserve levels, future needs, interest rates, and intergenerational equity (whether current taxpayers should pay now or share costs with future residents).