ST. PETERSBURG — After several years of dipping into the city’s rainy-day fund to weather the recession, city council members are saying it’s now time to put the money back.
The city ended the 2013 fiscal year with roughly $34 million in its reserve fund, about $8 million short of its target of maintaining a fund equal to 20 percent of its $211 million general fund.
It’s the second consecutive year the fund has been more than 10 percent short, which under city policy should trigger the development of a corrective budget plan. City council members are scheduled to formally request the plan at a meeting Thursday.
“When you take money out of the savings account, you need to put it back,” said Councilman Jim Kennedy, who asked that the request be put on Thursday’s agenda. “It’s basic, making sure your foundation is firm.”
But squirreling money away may run counter to new Mayor Rick Kriseman’s plans to expand the city and its profile.
Since taking office, Kriseman has assembled an eight-strong executive team including a deputy mayor, chief of staff and communications director. Salaries and benefits for those hires will cost the city an extra $1.1 million a year. Another extra cost was the severance payments and unused sick and vacation payouts awarded to several departing high-level administrators, including former City Administrator Tish Elston.
Budget trimming also could hinder Kriseman’s plans to develop the city’s economy. Suggestions from the think-tank-like transition teams he assembled include adding staff and resources to the city’s economic development department and hiring grant writers for that department and for transportation.
Council Chairman Bill Dudley said he has been trying to schedule a meeting with Kriseman to find out how the mayor plans to pay for his new hires. Replenishing the city’s reserve fund is a priority, he said.
“I told him I’m not in favor of going into the reserves at all,” Dudley said. “The reserves are there for other emergencies than hiring people.”
Maintaining a healthy reserve fund matters. The fund is intended bail out the city in the event of a disaster such as a hurricane. The 20 percent threshold is based on a recommendation from the Government Accounting Standards Board. Cities that fail to meet that target risk their bond rating slipping, which would make it more expensive to borrow money for construction projects.
City leaders dipped into the reserve fund to avoid layoffs and making cuts to services as revenue from property taxes slumped from roughly $100 million in 2008 to $69 million in 2012.
Kennedy said he would like to see a corrective plan by April.
“I think it’s appropriate to allow the new administration to have some time to digest it,” Kennedy said.
The plan is likely to give the city as long as five years to make up the shortfall. Some of the money could come from increases in property taxes as home values bounce back after the real estate crash. After five years of slumping prices, home values rose by an average of 3 percent across Pinellas County in 2013. City departments could also be asked to trim budgets by 1 percent, as they did in 2013.
“We’re not going to be able to generate $8 million in savings in one year,” said Tom Greene, city budget director. “It will be a three- to five-year plan.”