General Fund Undesignated/Unassigned Reserve Balance
(Compared to Goal of 25% of Next Fiscal Year’s Expenditure Budget)
The Council will vote tonight to approve the FY 2015 operating and capital budget. The budget Ordinance was introduced on April 22nd and a public hearing was held on May 13th. The Ordinance reflects the combination of the FY2015 City Manager’s requested budget and budget changes made by Mayor and Council during budget worksessions. The budget ordinance will be effective July 1, 2014.
Total General Fund revenues of $15,094,904 include operating revenues of $14,707,087, an interfund transfer from the Parking Debt Service Fund of $314,815, and use of unassigned reserve of $73,002. Total General Fund expenditures are $15,094,904.
By adoption of this Ordinance, the Council will approve the FY2015 Pavement Management Plan and Pay Plan. Also, by adoption of this Ordinance, the City includes its employees in the Employees’ Pension System of the State of Maryland as of July 1, 2014.
The good news about next year’s budget is that there will be no change in property tax rates, fines or fees. The tax rates for real and personal property tax will be set at 33.5 and 83.8 cents per $100 of assessed valuation, respectively.
That said, I do have some concerns about the overall status of City’s financial health, in particular in the area of the reserve funds. City’s reserve fund level has dropped recently (please see the chart on the left) and is close to the Charter recommended 25% level. This level is expected to drop further in the coming year.
City’s reserve fund level is dropping and is expected to drop further in the coming year. The level were 40% in FY12, 30% in FY13, 28% in FY14, In FY15 is projected to be 22%, which will go down the Charter’s recommended level.
The trend is worrisome because the City’s revenue figures are expected to remain flat in the next few years. There are talks about lowering the 25% recommended goal, but I think it’s a bad idea to do that. Instead we should learn how to cut costs to keep our financial figures healthy.