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SPLIT OVER RAINY DAY FUND

Some council members want to use reserve funds to head off cuts in the city's budget.

The City Council is poised to approve a 2010 budget Thursday that doesn't include money for summer jobs for teens, a domestic violence coordinator or an arts director.

The budget calls for slimmed-down police, fire and parks departments. Low-income residents at the city's Jamestown Apartments would have to pay more rent. Most nonunion workers would not get raises.

Union leaders, some city candidates and a handful of City Council candidates argue St. Petersburg can avoid some of these service cuts by using some of the nearly $300 million in the city's various reserve funds.

Their suggestions have been met with firm nays from Mayor Rick Baker's staff, which insists city policy forbids the use of its rainy day fund for recurring costs.

It doesn't.

The word "recurring" never makes an appearance in the two-page resolution establishing the fund.

Days before they are slated to approve a $207 million general budget, a majority of City Council members say they still don't know exactly how much of the reserves could be used to help cover the city's $18 million budget deficit. And the council's next major review of the reserves is scheduled for mid October, weeks after a budget must be approved by state law, leaving city leaders to make financial decisions amid confusion.

"As far as getting information from staff, it is like pulling teeth," said council member Wengay Newton, who wants the city to use the reserves to fund a $300,000 summer job program for low-income youths.

The uncertainty has led to heated debate over just how much money city leaders have squirreled away in recent years and whether a national recession is reason enough to return some of that money to taxpayers.

"The public attitude is, 'Why are you cutting all these services when you have all these reserves?'" said council member Karl Nurse, who wants the city to use the reserves to rehire its recently laid off domestic violence coordinator and fund summer jobs for youths. "To me, it is only common sense to use the reserves in times like these."

City administrators said they are being responsible with taxpayer money, conserving the reserves for future needs, such as a major hurricane or a greater budget deficit.

Dollars left over at the end of a fiscal year are usually put into reserve funds. Soaring property values in recent years helped the city build up roughly $286 million in savings.

Reserves are often crucial to a government's long-term financial planning. Credit-rating agencies carefully monitor reserve balances to evaluate a government's creditworthiness. Reserves need to be used sparingly, because they could be hard to rebuild.

The disagreement comes about when, if ever, it would be appropriate to use that money.

For instance, a recent draft of the city's budget states the rainy day fund can be used only for "one-time, or nonrecurring, expenses."

"It is city policy to refrain from using nonrecurring revenue for recurring expenditures," Deputy Mayor Tish Elston wrote in an e-mail to the St. Petersburg Times late Tuesday. "This is a general policy and would not necessarily be included in the language of resolutions."

The rainy day fund policy, however, states the money can be used "for significant decreases in any major revenue such as property taxes, state revenue sharing, interest/investment earnings, etc." The city has lost or will lose money in all these areas, including a roughly $15 million investment loss in securities lending this year and a projected $12 million drop in property taxes.

Critics question how council members, tasked with guarding the city's purse, can evaluate the mayor's budget if they don't have all the facts.

"With few exceptions, City Council members never ask the hard questions about the budget and accept whatever staff tells them," said George Friedel, a retired financial manager for the city of St. Petersburg who said he is troubled by how much money the city has tucked away in recent years. "That is why year after year, the city usually collects more money than it spends and, in my opinion, tries to keep the true amount of these surplus funds from City Council and our citizens."

Identifying surplus dollars might get more difficult in the future.

Last week, the administration presented council members with a series of proposed budget changes that would reorganize how the reserve funds are presented to the public and increase the minimum savings requirement to two months' worth of basic expenses or earnings. The changes are based on national accounting standards.

The proposed policy would significantly increase how much the city must save. Currently, many of the city's reserve funds don't have balance requirements.

Council member Jim Kennedy, who chairs the city's financial committees, postponed making a decision on the changes until the administrators can provide the council with more information.

Fast facts

If you go

A public hearing on St. Petersburg's 2010 budget is scheduled for 6 p.m. Thursday at City Hall, 175 Fifth St. N.

What's in budget

-The 2010 proposed general budget totals $207 million.

-The city wants to keep its property tax rate at $5.9125 for every $1,000 of taxable assessed value.

Residents could see some modest service changes:

-The Police Department's budget would drop from $86.8 million to $85 million.

-Water rates would climb 2 percent.

-Parents would pay 5 percent more to sign their children up for day camp.

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