When the city of St. Petersburg balanced its books at the end of the 2009 fiscal year, it discovered it had $2 million that had been budgeted but not spent. Now the City Council must decide whether to spend the money or save it for a rainy day. A city government exists to serve its residents' needs, and for many St. Petersburg residents, these are very rainy days indeed. The council should spend the money to help blunt the devastating impact of the continuing recession on its neediest residents.
City Council members Karl Nurse and Wengay Newton want the money spent on a variety of needs that could not be funded as the city cut its budget for 2009 and 2010. Some other council members and Mayor Rick Baker want the extra money put in the city's reserve fund.
Both sides have some good arguments. Newton and Nurse contend that in these hard times, the city should not be fattening its bank account but should instead be helping its residents. Nurse points out that numerous nonprofit social service agencies in the city are stretched to the breaking point by reductions in funding at the same time need for their help is growing. Nurse would like some of the $2 million used on one-time expenditures to help those agencies. In addition, he said, the state's cuts in financial support for housing initiatives mean that local government programs to place families in safe, affordable housing could falter at the worst possible time. He would use some of the money for that purpose.
City officials who want to save the $2 million are looking ahead to next year's budget season, which is expected to be worse than the one just completed, and the next hurricane season. They want to grow the reserves to help the city weather any storm, and they recently supported raising the city's minimum general operating fund reserve from 5 percent of the fund amount to 20 percent.
The city has nearly $300 million in various reserve accounts, but much of that money is designated by law for specific purposes or must be maintained in reserves to satisfy bond requirements. The city's general operating fund reserve has almost $18 million in it now. But the city also has a general reserve fund dubbed an "economic stability fund" by Mayor Rick Baker that contains more than $20 million. Those two funds combined still fall a bit short of 20 percent of the city's $207 million general operating budget.
Under Baker's administration, the city has made substantial progress toward the important goal of growing its reserve funds. But in these extraordinary times, the city must achieve a balance between addressing the city government's long-term financial goals and addressing the basic needs of St. Petersburg residents.
It's important to preserve the integrity of the various accounts established for specific uses and to avoid shifting that money to other uses, as some candidates advocated during the election campaigns. But in this case, the city had every intention of spending, not saving, the $2 million when it included the amount in its 2009 spending plan, which was approved by the City Council after public hearings. Now, the city should seize the opportunity to use that leftover cash to assist local groups and programs that offer a lifeline to people in desperate need of help.