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Is it time to break open St. Petersburg's bulging piggybank?

ST. PETERSBURG — Mayor Rick Baker and his staff say St. Petersburg is cash strapped.

In recent years, they've pointed to declining property tax revenue to justify eliminating a summer job program for low-income teenagers, scaling back on support for local art and social services groups and freezing pay that reneges on the city's union contracts.

The city's financial records paint a different portrait.

When times were good and property tax revenue skyrocketed, city officials squirreled away at least $70 million in savings, 35 percent of St. Petersburg's $206 million operating budget.

City Council members, mayoral candidates, union officials and taxpayers have all asked City Hall to take another look at St. Petersburg's bulging piggy bank — and break it.

"I'm turning over every rock I can," said council member Herb Polson.

Baker and his staff, however, say dipping into the city's savings for recurring expenses — such as salaries — before the economy rebounds would be shortsighted.

Next year could be worse, they warn.

They also oppose redirecting funds that have been earmarked for potential future purposes, such as new vehicles or sewer pipes, to general operating costs.

The debate raises the question: In these times of fiscal prudence and penny pinching, how much is too much when it comes to saving?

In all, St. Petersburg has $286 million in reserve, money the administration has no plans to spend in 2010.

"Are our reserves too much?" Baker asked during last week's budget hearing. "Maybe I am just too conservative in the way I look at budgets, but I believe you want to have money in the bank."

Excess revenue helps boost the city's financial ratings and ensures St. Petersburg will be able to pay its bills if the unforeseeable happens, said Deputy Mayor Tish Elston.

City policy states the funds must maintain a 2, 5 or 10 percent balance, depending on the use of the fund. Baker and his staff argue those numbers really represent ideal minimums, and a base of at least 20 percent puts St. Petersburg in a better position.

A St. Petersburg Times review of the city's budget found City Hall could meet its goal of a 20 percent savings for each fund and still have at least $70 million in excess cash.

In most cases, using the fund surpluses to pay for everyday expenses such as salaries or homeless shelters would require the City Council's approval.

Some of the funds overlap.

For example, there are three funds totaling roughly $111 million in surplus revenue earmarked for the water resources department. The department's annual budget is $96 million.

In a few instances, it is unclear what the surpluses might one day be needed for. For example, every year all city departments must set aside money that goes into a computer fund for future purchases. That pot of money has a $2 million surplus.

The proposed budget cuts are purse change in comparison.

A wage freeze is one of the most controversial elements of Baker's proposed budget. The savings: $4 million, or roughly 1 percent of the city's operating budget.

Union officials, who were promised a 2.5 pay increase, say Baker isn't playing fair.

"It's a red herring for the mayor to keep talking about what funds can't be tapped into," said Winthrop Newton, president of the firefighters union. "Why doesn't he talk about the funds that can be tapped into?"

Government leaders said there isn't a professional standard on how much savings is too much.

"It's subjective," said Kim Adams, Largo's finance director. "I can't justify more than 15 or 20 percent. Below 5 percent I'm nervous as a cat."

Ken Small, a financial adviser with the Florida League of Cities, said he recommends governments save at least 15 percent of their total operating budgets, and more if they can.

"You have to look at what the circumstances are," he said. "If you use too much now, what are you going to use next year?"

Cristina Silva can be reached at (727) 893-8846 or csilva@sptimes.com.

Is it time to break open St. Petersburg's bulging piggybank? 07/13/09 [Last modified: Tuesday, July 14, 2009 7:46am]
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