GENERAL FUND RESERVE
City Hall has lots of reserve accounts. This is the only one that counts in politics because it’s the only one that requires self-discipline among the politicians.
Good luck with that.
General fund money to a large degree comes from sales and property taxes. It’s spent at the discretion of elected officials. It goes mainly to public safety, parks and debt service.
There was a time during the Great Recession during which the general fund reserve had about $1 million – less than 1% of a year’s worth of general fund spending. In essence, the reserve was empty.
The plan now is to build the reserve over the course of several years to the 10% mark – about $30 million. City officials will tell you that a healthy reserve would be 20% to 25%.
It’s hard to imagine Fresno with a general fund “rainy day” account of $75 million.
The challenge, of course, is putting hard-to-get cash in the piggy bank instead of spending it. The temptation to spend is powerful, as witnessed by last June’s budget hearings. Council Member Esmeralda Soria, backed by considerable public sentiment, wanted to slow the reserve’s projected growth rate and move the freed money into parks.
Soria lost, but her point – it’s possible to go overboard on the saving habit – resonates in many parts of our local democracy.
Another factor to consider: As the Great Recession proved, City Hall has a built-in “reserve” in city services and employees. If the budget gets tight, just reduce the former and fire the latter until the books are balanced. Works fine if you’re not getting the services or the targeted employee.
Does the new mayor think a 10% general fund reserve is the way to go? How about 25%? And regardless of the goal, how fast should we get there?