Wisconsin News

City pulls additional money from reserve fund for budget

LA CROSSE, Wis. -- - It took the La Crosse City Council only a half an hour Thursday afternoon to decide how to cover an unexpected expense in the city's 2013 budget during a special meeting.

Last week the council approved taking $50,000 from the city's reserve fund to avoid raising taxes next year, but new estimates that came out on Wednesday nearly doubled that number, to $90,000.

Even with the increase, the City Council decided to cover the entire amount with funds from the $19 million reserve fund.

Mayor Matt Harter said Thursday's meeting was called to make sure the community was informed on the reasoning behind the decision.

"We have a budget adopted and this is a matter of accountability, full transparency and full consent from the Common Council to gain approval for how we intend to fix what came to be projections that were a little bit off," said Harter.

But will taking $90,000 from the reserve fund really save taxpayers in the long run?


City officials said the reserve fund is kind of like a personal savings account.

"At the end of the year, those savings on the expense side get put back in the reserve fund. The reserve fund is available for emergency-type appropriations," said Wayne Delagrave, director of the city of La Crosse Finance Department.

Not only is the reserve fund there to cover unexpected expenses, but it's also important in helping the city maintain a good credit rating.

"We're rated double A and they go through an annual interview process with us and they discuss intensely your financial situation. They want to talk about your reserve fund and how your budget is it balanced," said Delagrave. "The rating allows you to go into the bond market and borrow money for capital improvements you need to make in your community."

A good rating means good news for the taxpayers.

"You're going to borrow money at a lesser interest rate. The impact to the taxpayer is you're going to be paying less in interest on those capital improvements that you're making," said Delagrave.

So while the goal of borrowing from the reserve fund is to save the taxpayer money, could taking $90,000 out of the fund damage the city's credit rating, leaving higher interest rates for residents to pay off?

"I seriously doubt it will have any impact, especially when you look at $90,000 out of $19 million reserve fund," said Delagrave.

Other concerns raised by Delagrave and other City Council members is that borrowing money from the reserve fund now that's not an emergency could lead to more spending like that in the future.

Delagrave said the approved $90,000 will have to be made up in the 2014 budget, which means they'll start budget planning in the hole next year.

The city's operating budget is $74 million.

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