Aldermen Review Reserve

FAYETTEVILLE — Refilling frozen positions. Kickstarting construction on Van Asche Drive. Building out a regional park.

Those ideas and others were part of a City Council discussion Tuesday on how best to spend general fund reserve.

The city’s main reserve has grown from $9 million to $12.8 million, up $3.8 million, or more than 40 percent, since Mayor Lioneld Jordan was elected in 2008.

Jordan has been reluctant to spend reserve money, often citing uncertainty in the economy. “I’m a little bit on the conservative side,” the mayor said Tuesday.

But with more cash available and with expectations for better-than-projected revenue growth this year, city staff and Fayetteville aldermen have expressed their willingness to dip into the fund.

“I think this is the right approach,” Matthew Petty, Ward 2 alderman, said Tuesday.

Alderwoman Sarah Marsh last month requested an overview of the city’s reserve situation to prevent willy-nilly spending as projects arise. Paul Becker, finance director, provided an overview Tuesday.

Becker explained there are two reserve funds over which the City Council has broad discretion: general fund reserve and capital improvement reserve. Others, such as the Water and Sewer Fund and Solid Waste Fund, are restricted because they rely in large part on customer rates.

Of the the city’s $12.8 million reserve, $5.7 million is set aside to cover 60 days of operating expenses. That leaves $7.1 million that could be spent.

Jordan has repeatedly said his priority is increasing employee salaries. The mayor said Tuesday he would like to give workers between a 3.5 percent and 4 percent raise each of the next three years. If sales taxes, which comprise more than 60 percent the city’s general fund, grow at 2 percent each year, Jordan’s salary plan would create a roughly $5.2 million unfunded liability, according to estimates by Becker. If reserve is used to fill the gap, $1.9 million would be available without dipping into the 60 days’ worth of operating expenses, Becker said.

Those figures don’t account for growth from other sources, such as building permit fees or property tax revenue. And sales tax growth, at 4.4 percent through the first four months of 2013, has far exceeded the 2 percent growth expected when this year’s budget was approved. If sales taxes continue at that clip, about $500,000 would be added to coffers by the end of the year, Becker said.

Reserve could be used to fill some of the 26 full-time positions held open since 2009. Positions include four police officers, a 911 dispatcher, an assistant city engineer and the equivalent of two-and-a-half positions in Building Safety Division. Jordan said his preference would be hiring back emergency personnel.

Justin Tennant, Ward 3 aldermen, asked about extending Van Asche Drive near the Northwest Arkansas Mall. He said he assumed the project would spur development on the city’s north end.

Jordan agreed. “You don’t get a lot of headlines building infrastructure, but, at the end of the day, it makes your city solid,” he said.

Petty said property taxes from low-density residential development wouldn’t provide an adequate return on the city’s investment.

Rhonda Adams, Ward 4 alderwoman, said she wants more specifics on where plans stand for a regional park off Cato Springs Road.

Jordan said the city has about $4.5 million in its park fund to build soccer fields at the regional park. An $11.9 million bond proposal recommended last month by the Advertising and Promotion Commission would add $3.5 million for the park. That’s still a far cry from the $27.7 million price tag officials put together several years ago.

Jordan cautioned raises or street and parks project all have ongoing costs associated with them. “We have to maintain whatever we build,” he said.

“It’s one of those things where you get criticized when you’re not doing sexy, fun things,” said Don Marr, the mayor’s chief of staff. “But the reality of it is, we’re here to do basic things: flush toilets; pick up trash; keep people safe; mow the roads; fix potholes.”

At the same time, Marr added, “We don’t want to drop the quality of life. That’s the thing that sells the city.”

Alderman Alan Long suggested City Council members bring their spending priorities to another discussion tentatively set for next month. Once the wish list is trimmed, individual projects could get factored into the city’s 2014 budget when budget talks begin this fall.