I suggested that the city council put (more) money to helping residents and businesses struggling because of the Covid-19 crisis in an April 20, 2020 letter, rather than unnecessarily into the already-well-funded Equipment Replacement Reserve…
We share a deep concern for everyone affected by the Covid-19 crisis. I know that you are exploring how to deploy city resources to best aid residents and business most in need of help. I have one specific suggestion.
The proposed FY21 budget includes “Contribution of $600,000 to replenish the Equipment Replacement Reserve.” The 30 June 2019 ERR balance was $3,927,428 and the projected 30 June 2020 balance would be $3,786,712. However there is no compelling reason to maintain a high ERR balance. The current balance is quite adequate to cover anticipated spending for at least a year or two without compromising the city’s financial position.
I suggest you redirect the $600,000 to address pressing community needs. The city has programs in place. I would maintain the city manager’s proposed FY21 contributions to the city’s Emergency Assistance Program ($40,000), Housing Reserve Fund ($110,000), and Community Partners Program ($135,000), distributing the additional $600,000 among those programs, to help Takoma Park residents and businesses in need of help weather the crisis.
As an aside: I do know that there’s pressure to keep property taxes at 2019 levels. That $600,000 does represent 2.4 mills of the city manager’s proposed 2.6 mill property-tax rate increase. I am confident that you can find budget economies elsewhere in order to both avoid a tax increase and respond to the Covid-19 crisis.
Finally, I’ll repeat my suggestion that you amend the city charter to facilitate use of Emergency Reserve funds to address longer-duration emergencies. This amendment will provide you flexibility to consider transferring Emergency Reserve money to the city’s assistance programs later in FY21, without having to replenish the Emergency Reserve on July 1, 2021, long before city revenues — which depend heavily on income-tax revenue that will surely decrease in 2020 and Maryland and Montgomery County intergovernmental revenues that will be under a lot of pressure — recover to FY19 levels (anticipating that FY20 revenues will come in well below expected numbers).
Thanks very much for considering these suggestions and best wishes,