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OK to tap fund balance

December 4, 2012
The Leader Herald

Using savings to pay the bills can be a scary experience. No one wants to shred their own safety net, but bills have to be paid.

Governments, unfortunately, can sidestep the whole problem and raise taxes. Too often, our local representatives have approved tax increases to keep the municipality's savings in good shape and pay the bills - on the backs of their taxpayers.

Last week, the Fulton County Board of Supervisors had a similar choice in front of it. Confronting a proposed 2013 budget with about an 8 percent tax-rate increase, the board could have kept its fund balance - basically its own savings account - in better shape by sticking taxpayers with the bill.

Instead, the board approved using another $1.8 million from that fund balance to lower the county's average property tax-rate increase to 1 percent before adopting the $89 million budget for 2013.

The supervisors made the right call.

It's important to remember taxpayers in Fulton County already have taken big hits from rising tax bills the last couple of years. In 2011, the county increased the average tax rate by 10.3 percent. The county then raised the tax rate 5.5 percent for this year.

The taxpayers essentially built the fund balance. Given how much they have paid into it recently, it was acceptable for officials to tap the fund to keep the tax-rate increase down.

Some local residents may be concerned about the county depleting its fund balance. The state comptroller's office recommends counties have at least 10 percent of its general fund in the fund balance. For Fulton County, that would equate to a fund balance of about $7.5 million. The county will have about $4.7 million in its fund balance after using $3.3 million in the 2013 budget.

However, there are mitigating circumstances here. The most important is the county has no debt. That stands in stark contrast to other municipalities that have balanced their budgets via loans. Consequently, though, the supervisors have raised taxes when dealing with expensive unfunded mandates - and reduced aid - from the state government.

If the fund balance is too low to please the comptroller's office, perhaps it should consider how those mandates and aid cuts have hit Fulton County. The supervisors, at least recently, have tried to maintain the recommended fund balance, but the state has made it increasingly difficult.

The county will have to be careful about dipping into the fund balance for the 2014 budget. Barring a dramatic increase in aid or the state paying for some of its mandates, the board may be forced to make some difficult choices next year. Some of those choices could involve reducing services or personnel.

 
 

 

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