Editorials

March 14, 2014 6:03 PM

County makes right call on reserve fund changes

Beaufort County Council made the right call for taxpayers, approving a scaled-down reserve fund policy that won't increase taxes and won't result in county services being cut.

IslandPacket - newsroom@islandpacket.com

Beaufort County Council made the right call for taxpayers, approving a scaled-down reserve fund policy that won't increase taxes and won't result in county services being cut.

The proposal, which still requires two more votes by council, is sound because it:

  • Encourages the county to gradually grow the reserve by about $500,000 each year until it equals about 30 percent of its annual budget. That's an appropriate percentage as it's close to what neighboring counties have in their funds. A larger percentage (as much as 42 percent had been considered earlier) would have been unnecessary in a reserve fund, which should primarily be used to provide quick cash in emergencies. An oversized fund would be an unnecessary temptation, encouraging quick spending without thoughtful deliberation.
  • Eliminates language that would have required the county to sock $500,000 away each year in the fund, even if it meant increasing taxes or cutting services. This is a sensible change as counties need flexibility. In bad years, when tax collections are lower than expected or when surprise expenses pop up, the county will likely need to lower the amount it puts in reserve. In good years, more can be put into the fund, offsetting the bad years.

    • And as we've said previously, elected officials should have to cast votes when mulling whether to increase taxes or cut services. Hiding behind a requirement that a reserve fund grow at a certain rate lets council members avoid the tough decisions for which they are elected to make.

  • Does not bind future councils. As new council members are elected, the amount put into the fund should be left to their discretion. They should not be forced to follow rules that may not make sense for the time that they serve on council.

    • But we still have concerns that County Council is not of one mind on the purpose of the reserve fund. Some council members and county staff continue to tout the fund as a way to fund economic development projects. As we have often said, we do not believe local government should serve as a developer.

    But if the county is intent on serving in that capacity (and it apparently is based on council's recent decision to make a $1 million land buy for a mysterious business) it should set up a separate fund to pay for development efforts and find a funding source. That would create a much-needed separation between its reserve fund -- to be used in emergencies such as repairing the roof of a county building that springs a leak, keeping county operations going if a hurricane hits or bailing out a county agency that suddenly falls short on cash -- and an economic development fund to be used for land and building purchases for prospective businesses and incentives to lure them to the county.

    Most importantly, the creation of a second fund will require County Council to specifically say the amount of money it is willing to spend on economic development efforts and to spell out how it will pay for them.

    Simply taking money out of the reserve fund for economic development purposes, as the county has previously done, is a crafty way to avoid thinking about and answering those questions.

    Beaufort County had made a wise decision to bulk up its reserve fund in a way that does not hurt taxpayers. Creating an economic development fund is an important next step if the county is intent on playing developer.

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