During the budget workshop on Aug. 24, the idea to create an emergency fund out of a portion of the city’s reserves was floated.
Sometimes labels do, in fact, mean everything.
Plant City leaders rarely pass up an opportunity to reflect on the city’s affluence. Hard decisions and quick thinking back at the start of the 2008 recession kept the city treading water without having to go into debt — a feat few other local municipalities were able to accomplish. When the economy eventually began to recover, it put the city in a good standing.
To this day, commissioners and city leadership boast about the lack of debt in the annual budget. Because of its sound footing there is a reassuring amount left in reserve each year. To access that money, there are strict protocols in place.
A change floated during the Aug. 24 budget workshop may make some of those funds much more readily accessible.
At the end of the proposed FY2020-21 budget, the city will have $15,362,299 left over. Those reserves are typically stagnant, a “worst-case-scenario” pillow for the city to fall on in the event something unexpected arises. City Manager Bill McDaniel suggested to rename a portion of the reserves as an “emergency fund.” That doesn’t put it into use — it just puts it in a new box with a shiny new label. And that shiny label means if something unexpected does arise, McDaniel can dip into the funds with ease because they are already earmarked for that specific use.
“I think that in the situation that we find ourselves in with the reserves, I think that this would be an appropriate time to designate an emergency fund within the reserves,” McDaniel said. “We live in Florida, we have hurricanes we have to deal with, we’ve been through a pandemic and this is a sound fiscal practice and policy to establish an emergency fund so you know that you have money earmarked and designated for that purpose. In looking at this, my recommendation would be that we designate $3 million of the reserves as an emergency fund. That money is in the reserves, but we know that is basically our bank to go to in the event of some type of catastrophic emergency that befalls our city.”
McDaniel explained that Plant City, and Florida as a whole, have learned the hard way that hurricanes can cause extensive damage that takes weeks, if not months, to recover from. Cities have to be prepared to start cleanup immediately and that can become an expensive endeavor. Even a tropical storm or — as we saw last year — weeks of nonstop rain combined with one too many heavy afternoon showers can lead to a costly repair bill that can have a rippling impact on the budget.
“As you can see in our budgets, we don’t necessarily put aside a million and a half, two million dollars to deal with a storm each year and when we have that problem we generally float reserves or reallocation money toward that until we can be reimbursed by FEMA,” McDaniel said. “Well, that process can take several years. Having an emergency fund established is, as I said (in the budget workshop), a sound fiscal practice and it basically creates that funding floor that, absent from other financial crisis, you always have that money in reserve to deal with that unexpected hurricane or other type of disaster. Even with the pandemic, we were very fortunate that we were able to keep our expenses low, but that’s the kind of thing that can fall under a disaster. You could have things that people don’t think about. You could have an airliner crash in the city that could create an extremely expensive management cleanup operation, and knowing that we have the funds earmarked to be able to address any of those foreseeable or unforeseeable emergencies is just good policy.”
Commissions change, even if the current one has held the same serving members for years, and this relabeling will also help future sitting leaders keep emergencies in mind. If the label exists, future leaders will keep the money there rather than reallocate it toward another project.
The first public hearing on the proposed budget is Sept. 14.