City gets reserve funds back over 60-day level

With a simple vote Tuesday, Columbus Council raised the city’s projected fund balance from about 55.5 days back up over 60 days.

At the behest of City Manager Isaiah Hugley, councilors voted to use several million dollars of projected salary savings during fiscal 2017 to restore the city’s fund balance.

Mayor Teresa Tomlinson said she wanted to commend Hugley and his staff for coming up with the “fiscally responsible” plan and Columbus Council for wisely adopting it.

“We just have to keep exercising this type of good leadership in order to get us to where we need to be,” Tomlinson said.

Having a healthy fund balance is one of the criteria that bond rating companies such as Standard and Poor’s use to give cities their bond ratings, which are tantamount to a person’s credit rating. Sixty days of reserves is considered a threshold below which a city’s rating can suffer.

Before the Great Recession, the city’s fund balance was near 130 days, but deficit spending over the last eight years has eaten into the reserves until they dipped this year to 55.4 days. A day of reserves is worth about $425,000.

Hugley’s idea, which council approved, was to take all of the salary savings in the city’s budget in this fiscal year and return them to the General Fund to shore up the reserves.

Salary savings occur due to things like turnover, retirements and delays in filling vacant positions.

For example, if a veteran city employee is making a higher salary at retirement, it will cost less to bring in a younger replacement.

Hugley estimates that the city will have about seven days worth of salary savings, or about $3 million, this year. Add to that about 1.5 days that the city expects to save due to the lawsuits against the city filed by former Sheriff John Darr and former Superior Court Clerk Linda Pierce being dropped by their successors, and it brings the city up to about 63.2 days.

The salary savings are spread out very unevenly across many Consolidated Government departments, with the majority, almost $2 million, coming from the police.

In past years, council has allowed some departments, especially Public Safety, to use salary savings for capital investments, but decided to devote all of those savings to restoring the fund balance this year.

This story was originally published January 11, 2017 at 1:08 PM with the headline "City gets reserve funds back over 60-day level."