Minutes 05/05/1987 - Laserfiche WebLink

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o TUESDAY, MAY 5, 1987 The profit is used in lieu of additional taxes to pay for those services that I have previously discussed. The Electric Fund profit is the major City enterprise that pays for those services. This profit is the result of a decision made by Council in 1975 and reaffirmed in 1978 to parallel APCo's retail rates. The alternative was to set our own rates. I am told that this would have meant employing a consultant to do this at a cost of thousands of dollars a year. Following this policy has permitted us to reduce the Real Estate Property Tax Rate from $1.85 to $.76 in stages. The number of Funds tends to distract us from the bottom line. We spend time pouring over memos regarding transfers of money from one Fund to the other. Of course, we must be satisfied that the future needs of the Enterprise Funds have been planned for. After that, we should determine how much profit is available to be returned to the people of Martinsville in the form of services. As we work our way through this process, we must never forget that the alternative is increased taxes or curtailment of services or programs. As a monument to past decisions on the part of the Administration and Council, this chart has been prepared to show what I choose to call "The Bottom Line" . The figures reflect a total of all Fund Balances at year's end. Five of the figures are audited. The growth is a result of conservatism. This Council should determine what this "Bottom Line" should be. We have a recommendation from our Manager in an informal memorandum that we establish a General Fund Contingency between $500,000 and $700,000, a minimum balance of $400,000 each for Water and Sewer and the Electric Fund balance between $800,000 to $1,000,000. If Council would consider $3,000,000 (7.5%) as a total Fund Balance figure, then it should appropriate this figure as a Contingency. This would leave $5.27 million for future uses. We have $2,254,458 in the form of a C.D. set aside for future purchase of the P.S.A. portion of the City's Sewage Plant. I am sure that there are Major Capital Improvements that all of us would like to see Martinsville have. Temporarily, we should appropriate this money and set it aside until more deliberate decisions can be made. For example, a portion could be appropriated and set aside to eliminate the "red water" problem. I would like to express two personal beliefs that I have held over the years. First, I expect Agencies or Departments to ask for only the money that they think they will need. By the same token, I think that they should be encouraged and allowed to come back during the year and ask for additional funds as the financial picture becomes clearer.