Savings that exceed town targets offer peace of mind, ability to plan big purchases, town leaders say.
It's more than the equivalent of a jar in a kitchen cupboard, stuffed with cash and set aside for the inevitably unexpected.
No, it’s actually an integral and long-running line item in Longboat Key’s town budget that serves that quaint “Saturday Evening Post” role on a municipal scale. But the town’s fund balance can also serve as something more: be a funding source for big purchases, serve as a source of peace of mind and impress those with capital to lend.
The fund balance is forecast by the end of the fiscal year to stand at about $8.7 million, enough to operate the town for 194 days — 104 days beyond the town’s target of 90 days.
However it’s used — or not — it brings a sense of security of mind around Town Hall.
“This reflects the nervousness of living on a barrier island,” said Mayor George Spoll in the town’s second budget workshop, which leads to the ultimate approval of a spending plan in September. “One of the things that has always been pointed out to us, in the event of a storm surge, you could end up with a protracted period of time without tax revenue. It’s not like being on stable ground.”
It’s a fluid figure, growing over the course of the past budget cycle, estimated to end the 2019 fiscal year about $400,000 higher than on Day One as a result of general expenses trending lower than revenue.
Town Manager Tom Harmer emphasizes the fund balance isn’t used to square personnel or operating costs. That’s done with a combination of ad valorem (property) taxes, non-ad valorem taxes and other funding sources alongside a careful watch over expenses.
But to accomplish some one-time purchases, town leaders can dip into the fund balance. Among the plans for that kind of spending in the projected 2020 budget:
- Replacement of the Town Hall generator ($160,000)
- Town Hall painting ($50,000)
- Roof replacement ($25,000)
- Bunker gear for Fire-Rescue ($38,000)
In total, the town plans to spend about $417,000 from the fund balance next year.
Harmer and Finance Director Sue Smith told commissioners they would closely monitor the last few months of the 2019 budget year to deliver an updated figure with which to start 2020. Even with those baked-into-the-budget plans, that would still leave 180 days of savings ($8,285,921).
Although Harmer said he didn’t recommend spending down the fund substantially, there was room to consider some unfunded proposals beyond those that are already earmarked.
Some of those include:
- Construction of the planned center turn lane on Gulf of Mexico Drive adjacent to Country Club Shores;
- Canal dredging;
- Setting up a so-called sinking fund to prepare and save for purchases like fleet vehicles; and
- Additional phases of sea-level rise planning.
Commissioner Mike Haycock said he was eager to have those discussions in the new fiscal year. “The way I look at it is these are taxpayer dollars that we’re just sitting on, and we should put them to some use,” he said.
Beyond uncertainty and savings, the fund balance also looks good on the town’s balance sheet, Smith said. The town has often received favorable credit ratings because of its fiscal planning.
Commissioner Randy Clair said the perception that the town sets a fund balance standard and routinely exceeds it is a big positive.
“There’s more than perception there,” he said. “It’s reality. It’s double. It’s a huge advantage.”