HARDY KING - IRMO'S MAYOR

WHAT IS RESERVES? A Supply of Cash not needed for immediate use, but available if required.

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Councilman Walker recently stated at his campaign announcement that the Town had 3 million dollars ($3,000,000.00) in reserve. And under his years of service we had a 5 million dollar budget. In 2004 when he was first elected the Town's budget was approximately 2.3-2.4 million dollars. Now most conservative elected officials want to run for election or re-election and campaign on how they have cut the budget, not grown the budget. Yes, budgets do grow, the Town grows, we need more people, more police officers, benefits go up, everything goes up, so does the budget. But if you are a conservative, I don't believe you would consider bragging about a bigger budget an accomplishment. But if you have nothing else to brag about, I guess that's all you got.

Let's talk “Reserve”. Now most people consider a reserve a savings account, a backup account, a rainy day account. That is what a reserve is. You are reserving it for future needs. You don't need it, but it's there if you do, so you don't have to go borrow. Now the facts and figures below show the Town's last fiscal year. The monthly balance, the local government investment pool (LGIP), which is where the Town puts all our money, like a checking account. When we write expenses each week, we transfer out what we need to pay those bills for that week. If you notice, and do the averages which I did, our LGIP/Checkbook Balance averaged $2,607,125 in the account. (See PDF below)

Notice between our fiscal period beginning July 1 and the End of April we had 10 months with not a lot of money coming in. Two months, May and June, are when half our revenue comes in. In order to pay the bills for the first 10 months of our fiscal year, we need to have $1.2-1.4 million in a typical year so we can pay the bills without borrowing money throughout the year. If you take our average of 2.6 million subtract what we were short last year for those 10 months of 1.2 million, the difference is 1.4 million that you could call the “reserve”.

So when Walker says we got 3 million dollars in reserve, that is not accurate. We may have had $3 million in our checking account the last day of the last month of our fiscal year. But our average was 2.6 million and 1.2 million of that was already allocated.

If you write your bills in your home, you know the difference between what you need to pay the bills, how much you got to pay the bills, and extra. If you run a business, you know what you need to pay the bills, and what you need to keep in reserve for slow months. This is why some people can't keep their bills paid, their doors open, and end up having to close their business.



FISCAL YEAR – July 2016 through June 2017















Month

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

LGIP

3,066,503

3,068,520

2,970,607

2,672,619

2,524,422

2,376,310

2,278,171

2,229,898

2,231,833

2,158,731

2,395,282

3,312,504














Revenue

188,808

194,033

162,963

80,119

224,407

209,578

433,994

171,508

248,265

288,644

578,610

1,690,893

Expenses

354,033

320,529

287,370

326,126

358,908

441,671

299,533

334,121

269,139

329,606

338,794

521,407




























Between July of 2016 and April of 2017 there was: Revenue of $ 2,202,319

Expenses of $ 3,321,036

Shortage of < $ 1,118,804>

The LGIP monthly balance for 12 months from July 2016 through June 2017 averaged $2,607,125 in the account, and we're short at the end of a 10-month period $1,118,804.

Then at the beginning of the 2016-17 Fiscal Year we would have needed approximately $1,200,000 in the account on that day to have enough money to pay all our bills for the next 10 months before we replenish our account.

If you take the $2.6 million we have in that account on average, and deduct the $1.2 million we need to pay our bills before we have a big influx of cash, leaves approximately $1.4 million that you could call “a reserve”. Money we could take out of our account, put it in a savings account, call it a “reserve account”, a rainy day account, or whatever you desire.

Our true reserve is approximately 1.5 million dollars.



Irmo, South Carolina