For the first time in many years, the city’s Board of Finance is tapping the rainy day fund to help hold property taxes down.
“We never touch that money,” said Finance Chairman Rich Miecznikowski. “We only use it for a unique opportunity or an emergency.”
“I consider this an emergency, he said. “Towns are drowning in this economy and we want to help the taxpayers swim.”
The city’s rainy day account – technically called its undesignated reserves – amounts to $17.9 million. That’s 10.5 percent of its annual budget, a healthy excess that few municipalities can match.
But the finance panel agreed to lower its threshold for the fund to 9 percent of the budget, freeing up $2.5 million for a special fund that can be tapped to pay for equipment and projects that would otherwise fall by the wayside.
City Comptroller Glenn Klocko said the money in the new sinking fund won’t be used for operational costs.
Klocko said that tapping the rainy day money for normal expenditures that are part of the annual spending plan would create a hole in the following year’s budget because there would no longer be reserves to use.
Using it for operational costs “would only exacerbate the problem” in subsequent years, Klocko said.
But relying on the excess to fund capital items – equipment and projects – would not have the same impact, Klocko said.
For example, Mayor Art Ward and Klocko have both said it is unlikely the city will pay for new police cruisers in the coming year because it is clamping down on spending
But it is possible the city might use money from the new sinking fund to pay for cars so that it can continue the normal replacement of aging cars.
The new fund “offers a way to pay for some items” that would otherwise have to be put off, Klocko said.
Miecznikowski said that using the excess reserves “is a first” in his long experience on the Board of Finance.
Financial experts urge towns and cities to put aside cash equal to between 5 and 10 percent of their annual spending in order to cover unusual opportunities or to help weather a crisis.
Bristol has chosen to remain on the flush end of the scale for many years in order to preserve is sold financial standing.
“Bristol is in an unparalleled position” because of its healthy rainy day fund, Klocko said, which gives officials options for dealing with the fiscal pinch that every municipality is facing because of the recession.
Copyright 2008. All rights reserved.
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