From Deseret News archives:

Council to reduce the number of funds in light of surpluses

Published: Tuesday, May 17, 2005 10:19 p.m. MDT
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Salt Lake County officials are looking to reduce the number of different funds they have, forcing different interests to compete for the same dollars.

Council fiscal analyst Darrin Casper gave council members a crash course in the county's 43 different funds Tuesday as county leaders attempt to whittle that number down to 35.

Managers of each of the county's funds tend to build up surpluses to guard against fluctuations in the economy, inflation and to avoid imposing tax increases.

Such a cushion is generally a good thing — and a big factor behind the county's sparkling AAA bond rating — but can lead to wasteful spending.

"It doesn't put the pressure on the manager of the fund," County Councilman Joe Hatch said.

"It means they don't have to exercise the discipline of competing for money," chief administrative officer Doug Willmore said.

With a yearly budget of about $750 million, the county has about $200 million in surplus monies in various funds, three-quarters of which is undesignated. Willmore said that, roughly speaking, that overall surplus could likely be reduced to $125 million without damaging the county's bond rating or readiness for economic variables.

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"You want to have a (positive fund) balance in there," he said. "How much is a different question."

The county's surplus is nothing new. In a letter dated May 25, 2001, Councilman Jim Bradley itemized surpluses in areas like the sanitation fund and the solid waste management fund that totaled nearly $23 million.

The surplus results from several different factors. The management of some funds is statutorily restricted, meaning there's not a whole lot the county can do to change them. Others have large surpluses because of the way the county does business.

The county's TRCC fund, for example, has a surplus of $16.5 million, according to 2004 preliminary figures. That might seem like a lot, but since that fund is the primary source of Salt Palace expansion funds, it's not enough.

"The TRCC fund is not healthy," Hatch said.

The county library system has a surplus of $11 million, but it operates on a save-and-build system — the county pays for new library branches in cash rather than bonding.

"Is that a smart thing to do? Well, it depends," Willmore said. "You could argue that either way."

The municipal services fund has a surplus of $21.6 million, the result of how the county has traditionally handled tax increases — imposing a large one once every several years, creating a surplus, and drawing down that surplus until the next tax increase.

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