As an individual or a business owner, prudence demands that you save money when you can and set aside money for emergencies, a rainy day fund.
Municipalities in the state of Utah, however, operate under a different model. State Code 10-5-113 reads as follows:
10-5-113. Accumulation of retained earnings or fund balance — Limit as to general fund — Reserve for capital improvements.
- A town may accumulate retained earnings or fund balances, as appropriate, in any fund.
- The accumulation of a fund balance in the town general fund may not exceed 100% of the total revenue of the town general fund for the current fiscal year.
In other words, there is a cap on how much money that a municipality can save. Our current year budget has a projected total revenue of the town general fund in the amount of $1,097,700.00. If Virgin brings in more revenue than that, the according to State Code 10-5-113 we must spend that excess revenue. We are not allowed to save it.
Every year since I have been Mayor we have taken in more revenue that we anticipated. Pursuant to State Code 10-5-113 we have been required to spend every year’s excess revenue.
I chose to spend the bulk of the excess revenue on the Public Works Department and the hiring of more employees for the town to help with the overwork of the previous small number of town staff. My decisions were approved by the town council. The Mayor alone cannot spend money. Spending decisions must be accounted for in the town budget, which in turn is approved by the town council.
The Public Works Department has now been outfitted with the necessary equipment to allow it to function properly for the next decade or so. New property has been purchased to allow for the construction of a new fire station in Virgin. Future monies are allocated to pay salaries and to pay off the loan to purchase and renovate our new town hall. Money is not being wasted. Every penny spent is for the benefit of the town.
While there are undeniable infrastructure needs in town for both road paving and water projects, the amount of money necessary to pay for those projects is probably 10 to 20 times what we have in savings. And the amount of money we receive each year in excess revenue will only allow us to pave one city block and certainly not a road that is 3 blocks long. We just do not have that amount of revenue.
We can apply for grants and loans for those projects, and we have received some such grants and loans, but Virgin must supply matching funds for those projects. Matching funds for two projects alone will drain our savings and then we have nothing left in the case of a true emergency.
Our monies are being well looked after and will continue to be so in the future.