Kalispell may beef up city reserves

Financial advisers recommend people keep enough savings to be able to support themselves for six months without any income.

But how much unspent general fund cash should Kalispell, a city with taxing powers, aim to keep on hand from year to year?

Kalispell’s general fund carryover balances have improved markedly in recent years, growing from less than a quarter-million dollars at the end of 2009 to more than $1.5 million now.

On Monday, the Kalispell City Council will consider a resolution that would have the city strive to maintain a carryover balance equal to at least 20 percent of its general fund revenues.

That amounts to just under $2 million for fiscal year 2012-13, with officials projecting to collect about $9.8 million of general fund revenue, most of that coming from local property taxes.

The policy would not require Kalispell officials to budget to keep that much unassigned cash on hand. But it would give officials a “targeted expectation and direction” as they budget, City Manager Doug Russell said.

A 20 percent carryover balance would leave Kalispell with enough money to cover a variety of short-term cash flow issues or unexpected costs that may arise, providing a level of financial stability. The stash of reserves could improve Kalispell’s creditworthiness, possibly reducing borrowing costs, and if interest rates ever rise, increase the city’s earnings on deposits.

Of course, it’s also money that some Kalispell taxpayers may like left in their pockets, too.

“I think 20 percent is a good number to start off so we’re able to mitigate unexpected developments and yet still not create a financial treasure chest,” Russell said of his proposal to the council. “We don’t want to get into that scenario. We want to be able to put funds back into the services we provide.”

Kalispell has spent the last few years building up its general fund carryover balance, which dwindled to just $244,122 in 2009.

It budgeted to end fiscal year 2011-12 with a carryover general fund balance of about $1.4 million. End-of-year numbers are still being crunched, but the actual carryover figure is expected to come in higher than that.

“We’re carrying about $1.6 million,” Finance Director Rick Wills said.

“It’s coming in a little over budget, mainly because of departments doing a great job of containing spending ... It looks good right now,” Wills said about the general fund.

The drawdown of reserves in 2008 and 2009 was significant, with the carryover balance shrinking by almost $1.3 million over two years. But it was hardly the worst shape Kalispell’s general fund has been in, city budget documents show.

Kalispell’s general fund balance was $8,230 in the red to end 1989. It ended 1990 with just $531 on hand.

Carryover balances were built back up in 1991 and 1992. They ranged from a low of $792,432 up to $1 million and $1.5 million between 1993 and 2007, peaking at $2.1 million in 2005.

Russell said he doesn’t know how long it would take Kalispell to amass the several hundred thousand dollars more needed to hit a 20 percent carryover target, if that target is adopted Monday by the council.

In its preliminary budget for fiscal year 2012-13, Kalispell aims to collect about $9.8 million of general fund revenue and spend about the same, a scenario that if it plays out would add little if anything to the following year’s carryover balance.

“How long it takes to get there depends on priorities,” Russell said. “But we’re putting that out there as a new direction we’re taking, as opposed to continuing to put more in reserves but having it undefined. We’re starting with that defined avenue of where we want to go.”

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.