Traverse City Record-Eagle

Archive: Friday

January 17, 2014

City struggles to spend fund balance

TRAVERSE CITY — Get spending, city leaders.

Traverse City officials failed to trim their fund balance as promised in 2013, and cash reserves reached 42 percent of the city’s $13.7 million annual budget, a recent audit report showed.

The budget adopted by city commissioners for the year ended June 30, 2013 proposed to trim more than $585,000 from the city’s $5.7 million cash reserve, but instead reduced it by just $168,685. City officials were close on budgeting for revenue, but significantly overestimated the city’s spending.

“It confirmed what I already believed: that fiscally, the city is in pretty good shape,” said first-year Commissioner Ross Richardson. “This is like the second year they have tried to reduce the fund balance, but they’ve missed every year.”

Auditors recommend a minimum fund balance of 15 percent to 20 percent of expenditures and the city commission set a goal of 25 percent. Their first two years of effort haven’t come close, missing by about $900,000.

City Treasurer Bill Twietmeyer noted almost every department came in a little under budget last year. He singled out gaps in filling staff vacancies in several departments as having the biggest impact on the budget.

Mayor Michael Estes called the departments coming under budget last year an “important and positive issue” for commissioners to note when they begin their next budget discussions in late February or early March.

“It does indicate we have some additional funds that we can use for what otherwise might be discretionary spending,” Estes said.

Estes said city services didn’t lack as a result of the savings and he sees no reason to hire additional city staff. He instead favors using the new-found wealth for infrastructure improvements or other one-time costs.

Richardson said he hasn’t had time to determine if any departments need additional staff, but the city is in good shape to pay for additional people if needed. His first focus would be infrastructure needs, including transportation and waste water treatment.

Commissioner Tim Werner supports the commission’s efforts to reduce its fund balance but doesn’t see any rush to immediately spend the extra cash.

“If there are worthwhile places to spend the money we should consider it, but I don’t want to just spend the money because it is there,” Werner said.



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