Marlene Feist, 509.625.6505
Monday, December 16, 2019 at 2:50 p.m.
Spokane Mayor David Condon today is cautioning that a proposed new budget approach expected to be considered today by the City Council limits the amount of money available for reserves and risks the City’s credit rating.
“Through careful budgeting, the City has worked to get the greatest value for the citizens from the dollars they provide,” says Mayor Condon. “As part of that work, we have committed to creating adequately funded reserve accounts to allow the City to weather economic downturns or unforeseen events. We must continue on this path.”
Among other things, the Council’s 2020 budget proposal would sweep savings from vacant employee positions on a quarterly basis to create “opportunity” funds, which have yet to be defined. Normally, these savings would flow through to reserves at year end.
“Reserves are a critical component used by credit agencies in their evaluation of the City’s creditworthiness,” the Mayor notes. “Our credit rating determines the cost of borrowing money to carry out voter-approved initiatives and programs, like our programs to improve Riverfront Park and expand and renovate our library system. A good credit rating keeps costs low.”
Both Moody’s and Standard & Poor’s currently have provided strong ratings to the City, but both of them highlight that strong reserves and consistent financial policies to support those reserves are critical. Although the City’s reserve accounts are $6.5 million below targets agreed to by both the Mayor and City Council, the Mayor lauds the Council’s action to approve an ordinance change earlier this year to automatically move any General Fund balances at the end of each year to the City’s reserve accounts until targets are met. That change followed years of this practice.
“Spokane’s financial position will remain solid, supported by prudent management focused on structurally balanced budgets and conservative financial policies. Despite this strength, available fund balances remain below national medians,” Moody’s wrote in its latest opinion in November 2018.
The City’s Joint Administration-Council Strategic Plan, One Spokane, includes a commitment to develop and implement financial management practices that are transparent and accountable.
“Our citizens deserve a thoughtful budget with time to understand whether it meets their priorities,” Mayor Condon says. “The Council’s current proposal lacks that transparency.”
