City Council approves $8 million 'Rainy Day' fund

PAGE – The Page City Council on July 24 unanimously passed Resolution No. 1229-19, an interest-bearing reserve fund, which is hands-off except for emergencies and requires a super majority vote by the council to access.

Councilor Denise Warner, who was informed by City Attorney Josh Smith explained, “the super-majority condition will require six out of seven votes (plus an emergency declaration) to access the Emergency Fund.”

Warner, a strong advocate for establishing a rainy-day fund attributes the success to the “forward-thinking of our City Council as a whole.”

 He continued, “I believe we all realize the volatility of our sole source of income and the need to create a safety net for the unexpected so that we don’t experience another financial crisis like the one in 2011, and the ones before that.  Of course, good money management will go a long way to prevent that as well.”

Councilor Mark Cormier told the Chronicle, “Our goal is to set up a separate rainy-day fund that would cover approximately one year of operating expenses for the city in case of an economic downturn. We did not have this set aside in 2008 when the economy tanked, and many good city employees were let go.

Originally, the council discussed creating a $12 million reserve, which is closer to covering the general fund for a year.

Cormier said, “The council felt since we have been operating in the black for the past few years it was a good time to open the account and begin saving. We estimate we will need to make annual deposits into this account for a few years to get it where we want which would be between $10 and $12 million at present budget.”

Councilor Theresa Bowlby-Lee said, “I am glad the City Council sought to increase its reserve amount from $3 million to $8 million. It was determined that if there was an economic downturn, the $3 million in reserve would not be enough to sustain essential services for very long given the community’s dependence on tourism."

Lee explained that this fund is necessary to continue providing essential services to the community if there is an economic downturn. As the city’s main revenue source is sales tax (mainly from tourism), which are both highly unpredictable, the city needs to ensure we can continue operating.

“This city wants to reduce the possibility of having to do what a number of communities had to do during the 2008 recession, such as lay off staff; and this is one way in which we can do that,” Bowlby-Lee said. “While this is a great start and access to the funds requires a super-majority vote from the council, it is my belief that we as a council should identify examples (a non-inclusive list) of what constitutes an emergency which would allow the funds to be used, such as a declared disaster, if the general fund balance falls below a certain point (drop in sales tax revenue), or other reasons. We should also be addressing the time frame in which the monies must be replaced after it is used.”

“As it is our goal to be prepared for an economic downturn, council should also consider taking Linda Watson’s advice and review the minimum amount each year during the budget cycle, as the cost of running the city increases, which is reflective of the economy as a whole.”

Mayor Levi Tappan told the Chronicle, "Council has been budgeting very conservatively since 2013. With the increased in tourism revenue over the past few years we have been able to put money aside each year for emergencies. The Rainy (Day fund) is just a new way to track those funds. The money is already in the bank."


Video News
More In Home