City’s budget belt tightens with emergency fund
Published 11:03 am Friday, March 14, 2014
The Board of Mayor and Aldermen would be prohibited from reducing the city’s fund balance, or surplus, below the budgeted expenses for a fiscal year under a proposed resolution from Mayor George Flaggs Jr.
The resolution, which is expected to be discussed at the board’s Monday meeting, sets a policy that the general fund balance, including the city’s emergency reserve fund, cannot fall below 25 percent of the budgeted expenses set in the city’s budget.
Flaggs said the move is part of the city’s plan to get its bond rating back. Moody’s Investment Services, a New York-based provider of credit ratings and risk analysis, pulled the city’s A-1 bond rating in February 2012. Getting that rating restored was one of Flaggs’ goals when he was campaigning for the mayor’s office in 2013.
“What we’re doing is setting the example for future administrations, whoever it is,” Flaggs said. “We’re setting a precedent. If a board wants to spend more money, they’ll have to rescind the resolution.”
Also, he said, the resolution shows potential developers and businesses that the city is serious about being fiscally responsible.
“It shows that Vicksburg is in the business to stay in business,” he said.
He said the resolution was influenced by his years in the Legislature on the finance and banking committees. After serving 26 years in the state House, Flaggs retired from the Legislature in June after his election as mayor.
The Board of Mayor and Aldermen in September approved a $29.72 million fiscal 2014 budget, and in November approved a $3 million reserve fund, which will be used in emergencies in the city. The city also has an $800,000 contingency fund.
“What we’re trying to do is be good stewards of the taxpayers’ dollars and keep a fund balance in the budget,” said North Ward Aldermen Michael Mayfield. “This is all part of the budgeting process. I believe we’ve done everything necessary to get a bond rating, and this will ensure that we keep it. We don’t ever want to get ourselves into a situation again where we lose our bond rating or have to go looking for money.”
South Ward Alderman Willis Thompson believes the resolution is a good idea, but wants to talk with City Accountant Doug Whittington about the city’s finances before making a decision.
“I want to look at it,” he said. “I just want to make sure we don’t put ourselves in a box. I want to make sure that by signing this we don’t end up in a situation that can affect us financially. We’re already making sure we’re not overspending. I don’t think there’s any problem with it, but I want to be sure.”
Ensuring the city maintains a fund balance and keeps the emergency fund solvent, Flaggs said, is good financial management.
“We’re in an area that can be affected by storms and floods,” he said, “and you have to have money for those emergencies. You can’t operate a city on the edge of your finances. You have to keep a fund balance. It’s just a good business practice.”