By Robbie Ward
TUPELO – The city of Tupelo soon will have a new funding source to pay for fire trucks, sidewalks, park upgrades and other long-term purchases.
But the city’s $20 million rainy day fund won’t increase either.
Looking for a way to fund the city’s big-ticket expenses without doling out more debt, issuing bonds or pulling from the rainy day fund, Tupelo Mayor Jason Shelton pushed a proposal to change where excess tax dollars go after meeting all expenses at the end of a fiscal year.
The City Council unanimously approved Tuesday the plan to funnel leftover tax dollars into the capital budget instead of putting it in the city’s rainy day reserves, currently $20 million, $18.5 million of which is unrestricted.
Lynn Norris, the city’s chief financial officer, recommends keeping about a quarter of the city’s annual budget in reserves, about $8.5 million.
Shelton said this change will help bring an additional funding source to the city’s capital budget, which been a part of the city’s budget planning process since the 2011 fiscal year. The capital budget has been funded through a combination of using city reserves and issuing bonds.
“This is basically a way of funding the capital projects plan with cash so we don’t have to dip into rainy day funds or use bonds to purchase fire trucks and other equipment,” Shelton said.
From Fiscal Years 2014 to 2018, the annual estimated capital budget varies from $1.47 million to $2 million.
During the current fiscal year, the city funded the capital budget by taking $440,000 from the general fund and diverting about $1 million that would have paid for city debt.
The City Council approving the additional funding for capital budget is a piece of Shelton’s plan to bring continual funding sources to the area of city needs that includes paying for sidewalks, fire trucks, tornado sirens, parks improvements and other long-term items.
As of mid-November, this change could mean an additional $500,000 or so into the capital budget.
City reserves won’t be a guaranteed funding source for the capital budget. During times including the recent economic downturn, from Fiscal Years 2008 to 2011, the city didn’t have additional tax dollars to spare. In fact, it dipped in to the reserves to cover operational expenses some of those years.
However, in 2012, the city had $1.2 million leftover that went into reserves.
Another part of Shelton’s plan to add funding to the capital budget includes transferring $5 million from city reserves to pay off debt, decreasing Tupelo’s annual funding budgeted for debt payments.