UPDATE: Why is the city proposing an increase in our reserve funds?

UPDATE: While the reasons are still murky why they are doing this, there was some hints last night. They pretty much want to take more of the 2nd penny to fill the reserves. Why are they nervous about the reserves? Because the Feds are turning off the faucet. Local governments especially should work off of a balanced budget with the taxes they collect. Any additional funds from the state or feds should be considered ONE TIME MONEY to be used on needed infrastructure upgrades. Those dollars should never be considered as part of a permanent, ongoing budget. But this is what the city has done for years. Did you know that only two-thirds of the city’s budget is covered by local taxes and fees? The city has been using these extra monies to inflate the budget. The city should NEVER have a savings account. I think 25% is good enough for emergencies but anything above that needs to be spent or refunded. When I see $80 million in a city’s reserve fund, I don’t see prudence I see a community being overtaxed. Want to make significant cuts that will save citizens millions without effecting services? Cut staff. I figured if you cut 5-10% of employees in the city you could save up to $25 million a year. Salaries and benefits are paid from the 1st penny. We would have oodles of money to fill the gap. Recently a mayoral candidate says they plan to hire a HR director that will do a full review of ALL city employees and job performance. And the ones that don’t cut the mustard, well, they’ll be shown the door. This is past due. I think ALL city employees should be re-interviewed each year for job performance. I have often said, city employees are an investment, and we should take care of those investments, and when we have a bad one, we need to sell.

(Item #13) It is hard to understand where this is coming from;

This resolution is establishing reserve goals for the City’s General Fund and Sales/Use Tax Fund. Where the City is to maintain a General Fund available balance be at 25-35 percent of that year’s expense budget, maintain a 25% reserve minimum at year-end, establish the 10-year general fund forecast maintains reserves at or above 25% for each fiscal year, and maintain a Sales/Use Tax reserve equal to 3 percent of the total sales tax revenue budgeted for that fiscal year.

I will wait and see ‘why’ this is being proposed, but what I find interesting is this is being sponsored by the mayor while it is the duty of the council to implement this;

WHEREAS, the Home Rule Charter of the City of Sioux Falls authorizes the Council to appropriate City funds and set City policy; and

WHEREAS, the City Council desires adequate reserves to cash flow City government, mitigate risk from unforeseen reductions in revenue and changes in the economic environment, and meet any emergencies; and

WHEREAS, the City Council desires to ensure the long-term fiscal responsibility of the City; and
WHEREAS, the City Council desires an ongoing plan for a fiscally sound budget; and
WHEREAS, the City Council expects potential new revenue streams be approved prior to final
adoption of the budget.

Instead of trying to spend down some of the reserves (we have around $30 MILLION over what the current ordinance requires) for needed projects (not playlands) they are just going to make the reserve fund bigger so the council can’t touch it.