The city is tapping its savings accounts to pay its bills.
That's the analogy Finance Director Dave Brown used Monday night to describe the city's financial situation. He told the City Council's Finance Committee that it looks like the city will spend the $2.2 million it took out of its reserve fund to balance its 2010 budget.
While the city uses its reserves - essentially a savings account - every year to balance its budget, it typically pays itself back with money that was budgeted, but not spent during the year.
That may not happen in 2010, Brown said. He told the Finance Committee it looks like the city will spend all of the $2.2 million it took out of reserves this year.
Brown's message was a caution to committee members about spending money left unspent in the 2010 budget. Not only could the city use that money to replenish its fund balance, he said, it's likely the city will need its savings to make it through the coming years, as well.
Brown said tapping the fund balance hurts the city in a number of ways. It reduce the amount of money available for cash flow, cuts down on how much money the city can earn interest on through investments, and could increase the cost of borrowing money through a lower bond rating.
Like a personal budget, Brown said there are two solutions to dwindling savings: make more money or spend less.