September City Council Message
By: Todd Steinbrink, Contact this Council member
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A formula for unpredictable economies...
There's a lot of news lately about municipalities with declining revenues, budget deficits, and infrastructure crises. As you look around Montgomery and read about various current and planned activities, it’s natural to ask "Where do we stand?" and "Should we be spending money now?"
Everyone is familiar with budgeting, and while it is never very exciting, it is obviously very necessary. Montgomery is fortunate to have built and maintained a budgeting system that has served it well over the years. The system includes three critical components – conservative assumptions, five year budgeting, and maintaining healthy reserves.
Mapping out the next five years using conservative assumptions about anticipated revenues and expenses avoids the pain of sudden or dramatic deficits. In my near six years on City Council, I recall several where we assumed little or no tax growth, minimal state funding and non-existent investment returns. In better years, the City outperformed its assumptions and added to its reserves – saving them for a "rainy day."
Those reserves are critical in leveling our cash flow over longer cycles. And while it may seem tempting when the coffers look full – to dramatically expand services or facilities, buy land or rollback taxes – the detriment to invading those reserves is they won't be there when you need them, and services will immediately suffer. By having reserves, we "buy time" to adjust future budgets for any longer term changes in the economy.
Additionally, the reserves allow us to maintain capital spending priorities even in less stable periods. Because these expenditures are budgeted years in advance and reserves are "in the bank", the City is able to continue capital maintenance projects (road resurfacing) and make improvements (sidewalks) as planned. And having money in the bank these days not only means we don’t have to borrow to balance the budget or fix the streets, in fact, our dollars are going further than in years past. Our bids for work are coming in lower now that there is less commercial work to compete for and more contractors are scrambling for business.
The results are the City can continue its mission, maintain its residents’ quality of life and better leverage taxpayer dollars– we believe it’s a novel formula for how government should work in an unpredictable economy.