New PTC financial policies focus on maintaing adequate cash reserves

By JOHN MUNFORD
jmunford@TheCitizenNews.com

With Peachtree City's financial belt tightening looming in the future, a series of financial policies have been adopted by the City Council to help prevent cash shortfalls.

One of the key policies relates to maintaining adequate funds in several reserve accounts should the city's revenues slow beyond expectations. Finance Director Paul Salvatore, who proposed the policies, said budgetary reserves are also necessary to keep from borrowing funds at the beginning of the fiscal year to last until the county issues tax payments to the city.

The city's cash reserves had reached $2.8 million at the beginning of this fiscal year, but several key expensive items have reduced it to an estimated $1.5 million at the end of the year, Salvatore said. The $493,000 plan for employee pay raises and the hiring of 12 new employees played a large role in that, Salvatore said.

The cash reserve was used to balance the budget for those items although that is not the city's typical manner of handling expenditures, Salvatore said. But it was necessary since the City Council rolled back the millage rate to prevent an increase in property taxes, he said.

The reserves will also allow for unforeseen capital projects to be funded as necessary, Salvatore said. This is particularly important because the city's impact fees for new homes will dwindle in the future as new home construction slows down.

"In general, as Peachtree City changes from a rapidly-growing community to one that is at full build-out, it will become more challenging and especially important that we keep tight control over annual operating and capital expenditures and maintain adequate reserve balances," Salvatore said.

The new reserve policies, which will go into affect for the 2002 fiscal year, also focus on keeping 60 days of operating cash on hand to prevent using short-term borrowing at the beginning of the fiscal year until property tax revenues are put on the books, Salvatore said.

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