ViewPoint: When to dip into the piggy bank?

July 3, 2008

Over the last week or so, local governments across south Georgia passed budgets for the new fiscal year.  In these tough economic times, many of them dipped into their emergency reserve money to balance their budgets.

Is that a good idea?  Well, it depends on the situation.

The Government Finance Officers Association recommends governments keep a reserve fund that equals a minimum of nearly 15-percent of their general fund.  We checked out several governments in our area, and here's what we found.

The city of Albany has done a good job of building up reserves.  Even after taking almost $4.3million out of reserves to balance the new budget and make up for a shortfall in the 2008 budget, the city still has almost 20-million dollars in reserves.  That's a whopping 38.5% of the general budget.

Dougherty County is also in good shape.  County Commissioners used reserves to balance the '08 and '09 budgets, but still have $12.8 million in reserves.  That's 26.9% of the general fund.

We applaud Albany and Dougherty County leaders for saving up reserves so that they don't have to saddle taxpayers with another financial burden when times are hard.

The situation isn't so good in Lee County.  Commissioners transferred $1.3 million from the reserve fund to balance the new budget, leaving about $2.9 million in reserves or less than 14% of the general fund.  That is barely within those minimum guidelines, and it could be worse if an audit shows the county didn't save as much money as they anticipate by leaving numerous county positions vacant over the last year.

County leaders continue to live dangerously by skimping on services and barely getting by on optimistic revenue predictions.

The Dougherty County School System is the only one of the four entities that didn't take from reserves this year, they actually added a half million dollars to the emergency fund.  But that's because they don't really have any reserves to use.  The $2.8 million is only 2.1% of their budget.

Leaders say they know they need to build reserves, but they don't want to raise taxes to do it.  With many unfunded state mandates, it's tough to find places to cut the budget, and they say a tax hike would be their only option to add significantly to the reserves.

We know it's a tough balancing act.  They should work hard to provide necessary services and keep enough cash on hand for emergencies without over-taxing the people.  Doing that when times are good will make it a little easier to get through the tough times.