Section 55-B. Reserve fund for judgments and claims

1. The town board of a
  suburban town may establish a reserve fund for the financing of  all  or
  part of the cost of payment of:
    (a) Judgments or compromised or settled claims against the town; and
    (b)  Awards or sums payable by the town pursuant to a determination by
  a court, or an officer, body or agency acting in  an  administrative  or
  quasi-judicial capacity.
    2.  The  amount  of  any  such  fund  shall  not exceed the greater of
  thirty-three thousand dollars or five per centum of the total budget for
  such fiscal year at any one time, exclusive of any interest  or  capital
  gains  realized  from the investment of the money in such fund. Whenever
  an expenditure shall be made from such fund,  additional  money  may  be
  appropriated  or  transferred  thereto in an amount which, together with
  all money remaining in such fund including any interest or capital gains
  realized from the investment of the money in such fund, shall not exceed
  the greater of thirty-three thousand dollars or five per centum  of  the
  total budget for such fiscal year.
    3. There may be paid into such fund:
    (a)   Such  an  amount  as  may  be  provided  therefor  by  budgetary
  appropriation or transfer or raised by tax therefor.
    (b) Such revenues as are not required by law to be paid into any other
  fund or account, including the proceeds from the  sale  of  any  capital
  improvement or equipment owned by such town.
    4.  An  expenditure may be made from the fund only by authorization of
  the town board and only for a specific object or purpose,  the  cost  of
  which  may be financed therefrom. Any expenditure made from such fund to
  pay all or part of the cost of a judgment, claim, award or determination
  arising out of the management, improvement, operation or maintenance  of
  any  special  improvement  district located in the town shall be charged
  back against such district and  raised  in  the  same  manner  as  other
  district  charges. Any amount so charged to a district shall be included
  in determining the amount of such fund, exclusive  of  any  interest  or
  capital gains realized from the investment of the money in such fund.