Taking advantage of budget relief after pension reform, Jacksonville Mayor Lenny Curry‘s new budget proposed raising the emergency reserve.
When Curry came into office, there were worries that — absent pension reform — Jacksonville would have to tap into the reserve.
Curry’s team proposes a bump up to 6 percent this year, and the hope is to eventually boost that number to 8 percent. To that end, a proposal was made to trasnfer over $10M from the general fund to boost the reserve.
However, a former Council President and political ally sounded concerns that too much money is being socked away.
The measure was ultimately postponed, striking a blow at the fiscal policy of the Lenny Curry administration, with Finance Chair Garrett Dennis scoring a political victory as the week drew to a close.
“It’s our hurricane or catastrophe subfund,” Council Auditor Kyle Billy said, noting the budget ordinance would change the threshold from 7 percent to a more elastic 6 to 8 percent.
The actual proposed budget requires $68.7M to hit that threshold, an additional 3.1 percent over what is proposed.
Councilwoman Lori Boyer had qualms, noting that we have an operating reserve, this emergency reserve, and a “special Hurricane Matthew reserve that we’re putting $7M in.”
Billy balked at the phrasing; Boyer kept going, saying the latter two categories were “similar.”
The operating reserve was $97.301M at the end of the last fiscal year, Billy said. This year, the “worst case scenario” is that drops to $67M.
Boyer wanted a “better understanding” of the current balance than Billy provided, noting that the current debt management policy, passed a year ago, has 5-7 percent targets for each reserve fund.
“We were between 8 and 9 percent actually,” Billy said of the operating reserve, though the emergency reserve had been below 5 percent.
Boyer noted, on last year’s bond rating trip, that no concerns were raised about too much borrowing or insufficient reserves. She continued to press for details on increasing the percentage target.
“That’s ten million dollars on our budget,” Boyer said.
Billy noted estimated Matthew damages of $50M.
“We have to front the money for years,” Billy said. “We are probably $26M negative cash even without doing repairs [with expensive] debris cleanup.”
Boyer continued to press against “socking money away” rather than taking care of city needs.
“If it’s just how conservative and how safe I want to be, I have a problem,” Boyer said of raising the percentage.
CFO Mike Weinstein noted that this transfer is akin to putting money into a “secure lockbox.”
“The budget was driven by a great extent by pension reform,” Weinstein said, noting that spending would go toward non-recurring expenses, such as the $100M capital improvement plan this year.
“We recommend greatly to put more money there,” Weinstein said, noting AA- bond ratings being predicated on strong reserves.
“They understand we have obligations coming,” Weinstein said.
Boyer continued to press, noting that an operating reserve over 7 percent was mandated to be moved to emergency.
“A 5 to 7 range puts us below what would normally be a AA rating,” Weinstein said, noting that an AAA rating would be predicated on 12 to 15 percent.
“If we’re criticized for trying to save too much,” Weinstein added, “I’ll accept that decision.”
“I never thought we’d have this much debate trying to build up a savings account,” Chief Administrative Officer Sam Mousa said.
The “very healthy” operating budget includes, said Mousa, raises and a $131M CIP.
“It’s extremely important to keep raising the reserves,” Mousa said, urging that the $7M in the Hurricane Matthew fund is “spent,” given that $7M is the lowest threshold of the city’s share of the at least $50M in costs.
“We’re moving it from an operating reserve that is more likely to be used,” Mousa said, to savings — necessary in light of pending litigation that will cost the city big money.
“Why now?,” asked Councilman Reggie Brown, given the unfulfilled “promises of Consolidation.”
Finance Chair Garrett Dennis referenced dead bills on increasing swimming lessons and after-school programs, defending his sponsorship of them as deriving money from an overweight operating reserve fund.
“This is the opportunity for our city to finally become a bride as opposed to a bridesmaid,” Dennis said. “We control the purse strings.”
Indeed, from libraries and issues in the medical examiner’s office to parks, Dennis agitated for “bold decisions.”
Boyer cautioned against “raiding the reserves for regular appropriations,” putting the brakes — temporarily — on the Finance Committee’s impersonation of Supermarket Sweep.
The measure was postponed, striking a blow at the fiscal policy of the Lenny Curry administration, with Finance Chair Garrett Dennis scoring a political victory as the week drew to a close.
Banter, of sorts, closed the meeting.
“I have fun with you guys all the time, except when you guys don’t want to save money. I don’t understand that,” Mousa said.
“Buckle up your seatbelt,” Dennis advised. “This is the first week.”
Meanwhile, FEMA has yet to reimburse Jacksonville for allocation; the city’s RFPs had to be redone, as FEMA doesn’t consider Jacksonville’s minority business program (“Small and Emerging Businesses”) or geographic location as meaningful criteria.