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Wednesday, July 13, 2011

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Why We Can’t Use Fund Balance to Keep the Library

Public sector budgeting is both akin to private sector in some ways and vastly different in others. Any financial expert will tell you to keep a generous savings account for emergencies – no matter who you are!

Troy maintains a healthy fund balance (emergency fund) to help cover revenue shortfalls as well as to safeguard our budget from catastrophic disaster or infrastructure failure (like the massive road fix happening in the Long Lake/Livernois neighborhood). By the end of the three year cycle, though, that fund will dip to approx. 13% of our general fund balance -- a figure BELOW the suggested levels, and a position that puts us in grave peril. It will leave us at risk of the following:

n Elevated Fiscal Indicator Scores (triggers us even further up the watch list)

n Take-over by an Emergency Financial Manager

n Further loss of bond rating

Would it make sense to you to drain your 401K to finance a recurring monthly bill?? We can’t think of one financial expert that would recommend that strategy, yet that is exactly what Martin Howrylak and the Troy Citizens United are suggesting the City of Troy do – spend the fund balance to finance the library.

That money is spoken for. That money protects our future. That money is not THERE for the library.

Say no to reckless spending in Troy…Say YES to the millage on August 2.

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