Mayor Alvin Brown says the city can draw almost $17 million from its operating reserves to balance next year’s budget and still have more money banked in reserve accounts than when he took office three years ago.
Not so, says City Council Auditor Kirk Sherman, who says the administration is “confusing the public” in how it’s running the numbers.
“We’re not trying to confuse anybody,” Chris Hand, chief of staff for Brown, responded during a tense face-off in a City Council conference room this week.
As City Council heads to a Monday morning vote on a tentative property tax rate, the dueling versions of the city’s reserves are among of the biggest hurdles facing Brown in winning support for his proposed budget.
Rejecting the use of reserves would pop a $16.8 million hole in Brown’s proposed budget and force tough choices on where to cut services if council opts Monday to keep the tax rate at its current level.
Sherman has recommended that Council tentatively go with a higher tax rate so it has flexibility during summer budget workshops that will lead to a final vote on taxes in September.
City Council members had been hoping that meetings between the city’s budget administrators and the council auditor’s staff would find a meeting of the minds on questions raised by Sherman. That didn’t happen.
“I’ve got one side of the table saying ‘correct’ and the other side of the table saying ‘not correct,’” Councilman John Crescimbeni said after a Thursday session made no headway in bridging the differences. “It’s mind-boggling.”
The dispute over the city’s reserves is part of $55 million that Sherman has highlighted for scrutiny in Brown’s $1.13 billion budget proposal.
In the case of the reserves, the issue is complicated because there are different ways to slice and dice the amount of money the city could use in a time of fiscal emergency.
The city has three main groups of reserves, according to the city’s annual financial report:
■ An emergency reserve, established to respond to natural disasters such as hurricanes, contains about $48 million. Brown’s budget leaves that untouched.
■ The general fund’s operating reserve contained about $65 million at the end of September 2013, according to the financial report. Brown’s budget would take $16.8 million from that account.
■ A third account contained about $32 million in reserves from a host of trust funds that used to be under the control of the Jacksonville Economic Development Commission before the city disbanded that board. For accounting purposes, those trust funds were placed under the umbrella of the city’s general fund in 2013 after JEDC was abolished.
Brown wouldn’t draw from those former JEDC trust funds to pay daily operating costs for next year’s budget, but he does consider them to be available in the event of a financial emergency — a position that is shared by bond rating agencies when they assess the city’s finances.
“We recognize and understand there are goals for using that money,” Chief of Staff Chris Hand said. “But if push comes to shove, those are funds that ... Council could use for reserve purposes.”
The prior transfer of those funds from JEDC’s control also enables Brown to say that reserves have significantly strengthened since he took office, rising to $145 million from $108 million.
But if those former JEDC trust funds are excluded, the city’s reserves would be $113 million. Dipping into the reserves for $16.8 million would drop those accounts below the amount that Brown inherited when he took office.
That’s how Sherman looks at it, arguing the former JEDC trusts are “completely irrelevant” to how the city has been tracking its progress in building its financial reserves. In 2005, city officials sought to crack down on using one-time reserve payments to cover recurring expenses.
City Council’s meeting at 8 a.m. Monday won’t be the final word on whether tapping the reserves will be part of next year’s budget, but it will be part of the decision on a tentative tax rate.
David Bauerlein: (904) 359-4581