Borrowing From Peter To Pay Peter
The Charlotte City Council earlier this week approved nabbing $7.4 million from the city’s capital reserve account to help balance its current-year general fund budget, which city staff estimates is light about $8.5 million. Declining revenues – what policy wonks euphemistically call “economic deterioration” – are being blamed for the budget shortfall.
City staff assured councilmembers that raiding what is essentially the city’s rainy-day savings account to balance its budget wasn’t a sign of dire straights. The money grab would still leave the city’s unrestricted fund balance above targeted levels, city staffers said, and the city had set aside extra reserves last year to deal with an anticipated budget gap.
Staff also projects budget savings of at least $4.2 million; so the whole $7.4 million snagged from savings might not even be needed and the remaining balance could be returned to the reserve fund.
Sounds rational enough, but anytime you’re raiding savings account to cover operating expenses, it ain’t a good sign, no matter what kind of positive spin you try to put on it.
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