Reserve fund right place for city savings

In some contexts, five days wouldn’t amount to much. In the context of a city’s bond rating — specifically, this city’s — five days could make a difference ultimately measurable in millions.

Five days is about how far below the red line of a city’s fund balance — the amount of reserve funding a city has, measured by the number of days it could operate on that amount — Columbus had fallen. A 60-day reserve fund is considered the line below which a city’s bond rating could be lowered, meaning the cost of borrowing money could be increased.

In the heady days before the recession hit, Columbus had a fund reserve of more than twice that. But since then, the city has had to dip into the reserve to cover years of deficit spending — some of it avoidable, some of it probably not.

For now, Columbus is back above the line. Council on Tuesday approved a proposal by City Manager Isaiah Hugley to apply several million dollars worth of projected salary savings — retirements, attrition, turnover, etc. — and other expected cost reductions to the fund balance.

Those savings alone, Hugley said, should amount to about $3 million, or roughly seven days’ worth of reserve funds. That doesn’t even include whatever money the city will no longer have to spend on lawsuits by former Sheriff John Darr and former Superior Court Clerk Linda Pierce, both of whom were defeated for reelection.

That’s an uncertain figure for now, because even though Darr’s and Pierce’s successors have ended those suits, legal bills are still coming in from the two former officials, who as constitutional officers were entitled to have their legal expenses covered by the city. Because those expenses were incurred while they were in office, they are still the city’s problem. But not indefinitely.

The lion’s share of the salary savings are in Public Safety, which has sometimes used such money for capital projects. But this was a big picture decision in the interest of the whole city. It was the right idea by Hugley and the right call by the council.

This story was originally published January 14, 2017 at 4:49 PM with the headline "Reserve fund right place for city savings."