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Should Tarpon Springs be worried about its reserve fund?

TARPON SPRINGS — As City Commission candidates faced off during a forum this week, they seemed to agree on almost everything.

Development is good. Taxes are bad. Local businesses need our help. Code enforcement should be consistent. And Tarpon Springs should keep its own police department and not hand law enforcement over to the county.

But on one item, the candidates in the March 12 city election did differ: whether the city relies too much on its unassigned fund balance, known as its reserves. At issue is whether the account, meant to help the city pay its bills in times of trouble, is getting too low.

"This is my flagship issue," said candidate David Banther, warning the city should cut spending now to avoid having to eliminate important services later. "I want to take action now to prevent that."

Jim Bouldin seemed to share Banther's concern about the budget, as did Tommy Frain. They also are running for Seat 4 in the election.

But when the microphone was passed to the fourth candidate, Tim Keffalas, he read several numbers from a prepared packet and concluded, "The city is doing a good job of maintaining its reserves."

In closing remarks, Mayor David Archie backed him up.

"We are very fiscally sound at this point in time," Archie assured the 30 or so forum attendees Tuesday at the Woods at Anderson Park community clubhouse. "Reserves are for a rainy day, and if it's not raining now, when's it going to be raining?"

So is the city's reserve fund in trouble or not?

The short answer is no, according to finance director Arie Walker, who prepares each year's budget. There's some nuance, but the city is hardly on a downward trajectory.

The fund peaked at $10.9 million in 2010. Then it declined slightly during fiscal year 2011 to $10.4 million. The 2012 figure is at an estimated $10.5 million.

It's normal for the fund to fluctuate a little each year, she said.

If anything, the fund has gotten healthier in recent years. In 2007 the city had $8.5 million in reserves, which gradually increased until 2010, according to city documents.

"We basically have done about everything possible to hold the line on cost without reducing services," Walker said. "We may get the grass mowed less often, we've had years where we froze hiring."

City policy is to keep at least 20 percent of its budget in reserves for emergencies such as a hurricane or economic backslide. The city is far above that minimum, at about 50 percent.

Compared to many Florida cities, that's a fortune, according to a report by the Florida League of Cities. Most cities surveyed reported no policy for budgeting for reserves. And out of the 197 that do have a policy, the average reserve fund was 21 percent. Existing studies suggest having a reserve fund around 17 percent, the report states.

Banther's concern over the fund is rooted in his work with the city's budget committee. In 2012, a consultant hired by the city presented several financial scenarios, including one in which property values (and therefore property taxes) declined and then rebounded slightly.

Based on that model, the city's reserve fund could easily have plummeted to 20 percent by 2018, Walker said.

"(The analysis) showed us you've got to be really careful with what you budget and how much you spend," she said. "It was kind of a wake-up call."

In fact, property values in Pinellas County are on the upswing and the city is continuing to limit expenditures.

And the city could bring in some extra cash from an expanded tax base within the next five years. The Tampa Bay Times reported last week that Tarpon Springs is going through a mini-construction boom, with eight new subdivisions or apartment complexes in the works.

"We've done conservative estimates because we don't want to count our chickens before they're hatched," Walker said. "But if it all comes to pass, it's wonderful for the city to have that growth."

Contact Brittany Alana Davis at bdavis@tampabay.com or (850) 323-0353. To write a letter to the editor, go to tampabay.com/letters.

Tarpon's unassigned reserve fund

2007$8,549,150
2008$8,716,138
2009$9,203,929
2010$10,935,000
2011$10,410, 510
2012$10,500,000 (estimate pending an audit)

Should Tarpon Springs be worried about its reserve fund? 02/21/13 [Last modified: Thursday, February 21, 2013 7:45pm]
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