City to consider change to emergency fund
Different approach could free millions of taxpayer dollars, keep reserve within guidelines
A proposed Texarkana, Texas, policy change could soon free millions of dollars now held for emergencies in the city’s reserve fund.
City finance staff recommend changing from a percentage-based reserve to one that could fund city operations for 60 days.
As a result, the reserve balance would be cut roughly in half, but it still would meet common standards, Interim City Manager Shirley Jaster said in an interview Thursday.
Current policy is to reserve 25 to 35 percent of the total budget in case of an emergency serious enough to stop money from coming into city coffers. The reserve fund balance would pay for day-to-day operations and any extra expenses resulting from the crisis.
“Some of that is reimbursed by FEMA if you have an emergency, but there are just things that we didn’t plan on in our budget. We didn’t plan on bringing five bulldozers in to help clear the street or whatever the situation may be. That’s additional expense,” Jaster said.
The percentage range is the result of a study that determined the city should hold back between 17 and 25 percent of the budget. Officials chose the higher end of that range, 25 percent, as a minimum and 10 percent higher, 35 percent, as the maximum amount to reserve.
The 60-day standard—recommended by authorities such as the Government Finance Officers Association—is roughly equivalent to 17 percent of the budget. So at the high end of the current standard, 35 percent, the city has more than twice as much money in reserve as is advised. And moving to the 60-day policy will still keep the reserve bal-
ance within the limits the city’s study set.
Under the percentage-based policy, the reserve balance typically ranges from about $11 million to about $13 million, Jaster said. Adopting the 60-day policy will reduce that amount by approximately $6 million, which would transfer into the city’s general fund to be spent as the City Council sees fit.
“We’re not really using the money that we have available. We’re holding it for that emergency or rainy day, and really, are we holding too much? If we go by the guidelines—which is the best thing and is what most cities go by—it looks like we are. So we’re going to knock that back down.
“These are tax dollars that the citizens have paid, that we’re not having available in our general fund. We felt if we could use those monies it might help us on the revenue side,” Jaster said.
Jaster said she will introduce an ordinance to enact the policy change at the City Council’s next meeting, scheduled for Sept. 25. A public hearing and vote on the measure will follow in subsequent meetings.
The City Council voted Monday to adopt a Fiscal Year 2018 budget that compensates for a revenue shortfall by transferring $6 million from the city’s water fund to the general fund. A recently formed citizens’ budget advisory committee recommended the transfer to avoid a proposed four-cent property tax increase.