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Metro Council approves fund balance policy

Posted on Friday, November 29, 2013 at 10:30 am

The County General Fund Balance policy introduced by Metro Moore County Mayor Sloan Stewart in September was approved by the Metro Council during its regular monthly meeting on Nov. 18.

Stewart proposed that the Metro government maintain a fund balance of 5 percent of its total expenditures, with the possibility of continually growing the fund balance.

The total expenditures this year were $3.6 million, while this year’s estimated ending fund balance is $169,000. That’s 4.67 percent.

“That is where we want to set the policy at,” Stewart told the council during its October meeting. “If at budget time, our ending fund balance is around 5 percent of what our expenditures are, that could keep us out of a tax anticipation note.”

With a tax anticipation note, the local government has to borrow money from one fund in order to pay bills or budget items in another of the county’s funds. This typically happens when the Metro government is waiting on anticipated tax payments that may take a while to receive.

“Most of the time it is borrowed out of debt service to put into another fund to function until the tax dollars come in,” added Stewart. “By this time of the year, you can basically say that we are out of money in county general. We are trying to get our fund balance raised up to stay away from the tax anticipation note … away from borrowing funds.”

Even though the fund balance policy calls for it to be at 5 percent, Stewart reminded the council at the November meeting that if it falls below 5 percent, that doesn’t mean there has to be a tax increase to maintain those numbers.

“We have in the past had to raise taxes to have an ending fund balance, but that is not the case now,” Stewart said. “It will take a little while to grow, but this is for our good.”

At the October meeting, council chairman Coleman March suggested that the council look over the proposal and bring it back to the table in November for a decision. The council agreed, and after a short discussion at the November meeting a motion was made to adopt the 5 percent of expenditures policy.

It was approved unanimously via a roll-call vote.

The council was also informed at the November meeting that there would be a payment of $250,000 made on the loan taken out to build/repair the wall at Lynchburg Elementary School.

That large payment was being made in an effort to reduce the interest the county would pay if the note went the entire 10-year term. Last year the county searched for a lower interest rate and was able to go from 3.9 percent down to 2.6 percent.

That, along with the large payment to be made in early December, will greatly reduce the debt owed. Stewart said that the county will owe approximately $221,000 on the note in November 2014.

By ROBERT HOLMAN, Editor & Publisher