JDH Letter: City Council should maintain $6 million in reserve

Letter submitted to the Corvallis Gazette-Times on 6/30/2010 by John H. Detweiler - As I observed in a previous letter, we have a budget crisis. Expenses are up, revenues are down, and our reserves of all operating property tax funds combined are disappearing. At the very least, the next City Council must stop the drop in reserves by reducing spending before our reserves are gone.

One of our expenditures is "transfers out". Transfers include funding for capital projects as defined in the Capital Improvement Program (CIP). Another expenditure is departmental "special projects". These are one-time expenditures, actual projects, new equipment, or replacements for worn out equipment. However no matter how equipment is funded, we need to consider stretching out or suspending such expenditures. We must also be careful that we don't acquire improvements or equipment with future high operating and maintenance costs.

The Council should make plans to maintain enough reserves so there is enough of a buffer for the Council to react to unanticipated unfavorable events before running out of money. In my opinion, our reserve target should be $6 million because, looking at the rate of decrease in revenues minus expenses, the Council should be able to get its act together in sufficient time to avoid running out of money. Anytime the reserve is less than $6 million, we should reduce expenses and stretch out investments to build the reserve to more than $6 million. Anytime the reserve is more than $6 million, we could fund more services.