December 19, 2008

Finance board taps rainy day fund for $2.5 million

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.


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Copyright 2008. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com

23 comments:

Anonymous said...

So we're not laying off city workers or reducing benefits, and now we tap the rainy day fun to pay for equipment? Is Public Works now going to buy it's new recycling truck? Are we now going to spend this money on the new parking lot for city hall? How about a real need like fixing some of these roads so I don't break my car driving over potholes or break my leg crossing the street. We don't need to be spending this money on new police cars. I drive a Ford Taurus with 100,000 miles on it, let the cops do the same. You can't tell me they need 5 new cars per year. Do they use the same set of cars for every shift? I doubt it. How many patrollers do they have on each shift? I think there are more cars than shifts at any given time.

Anonymous said...

And tapping the fund just reduces income in coming years!

But the driving force seems to be that it is an election year.

I Am Concerned said...

Is the tapping to balance this years budget, or for the coming budget?

Or is that another secret?

Steve Collins said...

It's to help next year's budget. But they've created a sinking fund so I suppose they could tap it anytime they like.

Anonymous said...

can I tap the rainy day fund?? I want my money back!

na, na, na ,na said...

more positive input from the same losers.

Anonymous said...

8:13

The way this administration is going, we, the taxpayer, are the losers!

Anonymous said...

"And tapping the fund just reduces income in coming years!

But the driving force seems to be that it is an election year."
___________________________________
If tapping the fund saves me from reducing my funds during these tough times ~ I'm all for it!

Maybe the driving force is the lousy economy. Whatever the reason, thanks Mayor Ward!

Anonymous said...

7:45

It is pay up now or pay up later. And later willbe more expensive.

It is not treating the illness by taking appropriate action.

It is an election year.

It is not unlike what the POLITICIANS did at the state and federal levels toget us in this mess.

Anonymous said...

Sorry 9:27, but I disagree. Hopefully we'll all be in better shape down the road and payback won't be too painful, but right now things are looking pretty bleak for a lot of people. Keeping our taxes down now when we need it most isn't just an election ploy, it's a necessity!

Anonymous said...

I hate to say it - but its time we start to lay-off at City Hall. By not laying off is giving the tax payers the wrong impression of the serious situation our city has ahead of us and it will also make the board of ed wake up and start some lay offs over there as well. These employees work for the tax payers and the tax payers should be that last to suffer - I know it sucks, but thats the sucky benefits of working for government!

Anonymous said...

Everywhere in America they are layingg off people except the CIty of Bristol's workers. They are taken care of for life.Meanwhile I don't know if I'll will still have a job next month. The newspaper isn't the only thing going to be shut down. Who does the mayor represent, all taxpayers or just city workers?

Anonymous said...

11:01

Yes, things will be better in teh future.

However, think back to the 90's, which generally were quite good.

We (Nicastro) didn't raise taxes and didn't do the things we should have done when we coild have.

We are still paying for it.

If we don't cut costs now, we never will.

Mandrake said...

Ward and Kloko are just using funny accounting to get through the next election.

Anonymous said...

What's up w/ GASB 45?

Anonymous said...

Steve, 12:19

Are you saying that they can tap that fund to look like they are in balance this year come election time?

Anonymous said...

12:19 6:01

Last mayor to layoff did not get reelected.

Ward was around then and I would think he is well aware of where his support is.

Not with you or me.

I Am Curious said...

Who approved the raiding of the Rainy Day Fund?

Doesn't that require joint board approval?

Wurks 4 Me said...

I guess creative accounting isn't an oxymoron.

S. Claus said...

A Merry Christmas to All!!

S. Claus said...

A Merry Christmas to All!!

Anonymous said...

Steve,

I would be curious as to what the value of the Mall property is right now, because the Rainy Day fund holds an IOU secured by the mall property, correct? How does this affect the actual value of the overall fund. Is the fund really at the value the city claims it is, or is it far less because the mall property is worth far less than the city paid for it 5 years ago? Would be a very interesting article, and might be the real reason why the fund is being reduced by a percentage of the budget.

I M Curious said...

Another example of Klokos creative accounting.

We paid "n" dollars for the Mall,so we carry it on the books at that value until we sell it.

When was the last time the CURRNT value of the Fund Balance was published, listing the categories of assets make up this fund?

Or has the federal philosophy of accouting trickled down to Bristol?