Proposal for Additional Funds

Yesterday, during discussion of the upcoming FY 2009-2010 budget, I proposed that the City withdraw a little over $1.9 million out of the Budget Stabilization Fund (BSF), also known as the "Rainy Day Fund." I did not take my proposal to use this money lightly and spent significant time researching and determining the benefits vs. costs of doing so. In the end, I decided that, in my opinion, the needs of our schools and certain city services were too important to not attempt to address additional funding for the next fiscal year.

It is my belief that the future success, prosperity and long-term stability of the City of Roanoke is directly correlated to the success of our public schools and certain other programs that benefit, in an educational way, the youth in our community. There is no doubt that we are faced with a national economic recession that has sent ripples throughout state and local governments. Had we not faced such an unexpected and immediate emergency, I would have been loathe to even consider using any of the more than $19 million of unencumbered funds in the BSF, but feel as though we have little additional ability to raise resources. I am not in favor of raising taxes as I fundamentally believe that raising taxes during a recession, with folks losing jobs and discretionary income in decline as well as significantly reduced pension and retirement plans, is not the answer.

The BSF is comprised of taxpayer money paid in over the years. It is not the City's money, and I don't believe we should fear using taxpayer money when there is a real need for it. That said, I understand why some members of City administration do not want to use any of these funds. There are two main reasons that some are opposed - I completely understand these reasons and would agree with them 99% of the time. To me, however, this is that rare instance where we should go into the BSF. The two main reasons not to go into the BSF are:

1) Bond-rating agencies look at local government reserves when rating the locality. Ratings are important because they impact the interest rate that a locality can borrow money for and a downgrade in rating will increase that interest rate. I contend, however, that a slight downgrade is not the end of the world. IF we were to be downgraded, it would increase the interest rate by .25%. In other words, if the City were to borrow $20 million, this increased interest rate would cost the City between $50k and $60k per year. Is this ideal? No. But given the state of the City's budget, I believe worthwhile given the immediacy of the need. Additionally, in the scheme of a $257 million per year budget, this interest payment is rather minor.

2) This is one-time money for what could be recurring expenses. That is, if we find ourselves in the same, tough budgetary situation next year, we would have the same expenses and would then have to decide whether to go into the BSF again to pay for the services. This makes sense, though again would contend that any emergency or unexpected need can always be recurring. No one can ever predict what will and will not be a recurring event. For example, even a natural disaster can be recurring. Locations are hit by tornadoes two years in a row, floods two years in a row or other uncontrollable events. Likewise, we may or may not be out of the current recession next year, and though it appears we will be in a similar situation, nobody can predict that.

I believe to the core that now is an emergency that we could have never predicted but that we should not ignore when the effects on our schools and certain city services that are vital to the future of Roanoke are in danger. Major decisions and policies have been set that we all hope will be successful and will fundamentally change and improve our schools. Now is not the time to watch those recently implemented programs to be allowed to disappear.

Below is a breakdown of the proposed money and where it would go. Please feel free to leave your comments, both positive and negative, regarding my belief that we should withdraw money from the BSF for the FY 2009-2010 budget.

Total $1,907,867

$202,867 - Would keep both Washington Park and Fallon Park pools open.
$60,000 - Would keep the bookmobile operational.
$25,000 - Would keep libraries open 5 days a week.

$300,000 - Would maintain enriched, technology and life skills courses in RCPS summer school.
$600,000 - Would retain 20 teaching assistants, all accredited and the future teachers of RCPS.
$120,000 - Would retain 2 guidance counselors.
$600,000 - Would enable 10 empty elementary teaching positions to be filled.

Again, I want to remind any reader that I did not take this proposal lightly, believe that the above needs are vital to the community's educational attainment and economic future, outweigh the costs associated with going into the BSF, and are the right thing to do.

Court