One of the unexpected long term goals the Greensboro City Council agreed to pursue at its retreat on Monday, Feb. 24 at the ACC Hall of Champions was raising the unallocated fund balance from 9 percent to 15 percent.
The current unallocated fund balance is 9 percent of the general fund, not the entire budget. The general fund is about $305 million while the entire budget is $566 million.
The other funds carry their own fund balance. The Water Resources Capital Improvement fund according to the 2019 Comprehensive Annual Financial Report had a fund balance of about $51.5 million.
The unallocated fund balance is akin to a personal savings account. It is sometimes referred to in other jurisdictions as an emergency fund and 9 percent is about $27.5 million. The City Council has set as its goal to raise that to 15 percent, or about $46 million – an increase of about $18.5 million by 2023.
The city receives about $2.8 million for every penny on the tax rate.
If the increase of $18.5 in fund balance comes from property tax it would take over 2 cents of property tax revenue for three years.
And $27.5 million is not all the money that the general fund has in reserve. It also has a Capital Reserve Account. If the city collects more money in a year than it spends, first those excess funds go to raising the fund balance to 9 percent and any excess funds go into the Capital Reserve Account, theoretically until the Capital Reserve Account has a balance of $10 million and then the funds are spent on capital projects. But the balance actually hasn’t made it up to $10 million in years.
The state recommends that local governments have a fund balance of at least 8 percent, but for state purposes, according to Budget and Evaluation Director Jon Decker, the Capital Reserve Fund counts as fund balance and currently is about $5 million. Which means for state purposes Greensboro’s fund balance is not 9 percent but is about 10.5 percent.