By Karen Kennedy
Many songs over the years have encouraged us to “save for a rainy day,” and the 1950s standard “Here’s that Rainy Day” ends with the poignant phrase, “Funny. That rainy day is here.”
Although most of us would be wise to heed the advice in those songs, but sometimes don’t, both city and county government entities actually maintain “rainy day” funds, and that should give us all an added sense of security.
But how much money set aside is enough? What constitutes a “rainy day”? And under what circumstances might officials dip into those funds? Who gets to decide?
Each government entity that operates within Carmel’s boundaries has millions in either rainy day funds or other reserves.
And the authorization of expenditure from those funds must come from the governing fiscal body that oversees the entity — the city or county council or the township board.
“We are in very good fiscal shape,” said County Council President Rick McKinney. “We have no immediate plans to touch our rainy day fund, as in addition to the $22 million in that fund, we also have an excess of over $20 million in our general fund. Even with the harsh winter, we’re in very good shape in terms of winter weather maintenance — salt, plows, etc.
“There has been talk about using some of the money in the rainy day fund for a special project, such as expanding the judicial center, rather than bonding the full amount,” McKinney said. “But we’ll cross that bridge when we come to it. Over the past two or three years, we’ve been able to save more and more.”
“It’s not a lot of money, that’s for sure,” Clay Township Trustee Doug Callahan said of its $94,723 rainy day balance. “We’ve had as much as $700,000 in there over the past seven years. And with all of this bad weather, we may have to use it for road maintenance or township assistance. People may need help with utility bills and such.”
“The Department of Local Government Finance recommends a rainy day fund have about 10 percent of a city’s general fund budget,” said City Council Finance Chair Luci Snyder. “For Carmel, that would mean somewhere between $7 and $8 million. We are above that.
“It is an emergency fund,” Snyder said. “Emergencies can be natural disasters, such as a tornado or flooding, or even a particularly harsh winter. Emergencies are not part of the general fund, even though there have been efforts to include those funds in the operating budget. But they can also be legal situations or other unanticipated, unbudgeted expenses.”
For example, Snyder said, the council has recently offered rainy day funds to try to help settle the largest of the three pending lawsuits over the Palladium’s roof. However, the mayor declined the offer at this time, stating that there was still disagreement over the settlement amount and that the case is not ready to be settled at this time.
“It’s a safety net,” said city council president Eric Seidensticker, “for something like the collapse of a sanitary sewer. We have huge debt along with needs that pop up on a regular basis that are not funded because we didn’t know about them. We don’t use the rainy day funds because something cost more than we expected it to. That’s not an emergency — it’s just bad planning.”
“There is no magic to the term ‘rainy day’ funds,” said Carmel Mayor Jim Brainard. “It could be in a ‘rainy day’ fund or an operating balance in another fund. The key is just to have several months operating cash put back, and we most certainly do.”