Soon after joining the Council, I saw the budget and found that the city earned very little interest on our money. The funds were invested in a state fund where all the cash is immediately available and earning a nominal interest rate. Basically, it looked like we have more than $100 million in a checking account at 0.01% interest. This was the safest way to invest, but too extreme.
By investing in federally insured CDs at a variety of banks, treasury bills, and other safe investments approved by the state, we have moved our longer-term funds and earn 2-3 million dollars each year in interest!
Also, more recently I saw the city over-investing in the account for retiree health insurance. The city hired a consultant to analyze this and determined that, without risk to this important benefit, reduce funding by about $1.5 million annually.
I’m proud to have improved the city’s budget by over $4 million annually! We have never had to raise our property tax rate during my 9 years in office, and I will continue to watch every line of the budget to make sure your dollars are well managed.
Pay-Go
Gaithersburg has a long-standing “pay-as-you-go” policy. We have zero debt, and we must pre-fund any major projects.
The city has more than $100 million in its accounts now, which seems like a lot for a city our size – it’s almost double our annual budget. The city has run surpluses the past few years, thanks to some serious belt-tightening and by saving for future projects, and with some helpful covid relief funds from the federal government.
Where have you heard of a city that has no debt and a budget surplus?
A related post on the Capital Budget
And a post on budgeting for Stormwater Treatment.
Links: