by Leslee Kulba
Wild West blogger
The City of Asheville is considering restructuring its financial policy to require enterprise funds to maintain their own fund balance. It is not uncommon to hear fiscal conservatives elected to office advocate for a large fund balance. Although this is prudent in the private sector, a government fund balance, at least on the surface, represents capital removed from the private sector that cannot be invested or just spent by the little guy.
Asheville has had a problem maintaining its own policy of keeping the general fund balance over 15% of the general budget. So, in addition to the 15%, the city wants minimum fund balances to be maintained by the Water Fund, Stormwater Fund, Parking Fund, Transit Fund, Civic Center Fund, and Golf Fund. All fund balances are to be 8%, except for the Civic Center’s (16%) and Water’s ( 100%). The Municipal Golf Course has a bad reputation for losing money, so:
The City is pursuing alternatives that will assist the Golf Fund in meeting the standard in future years.
The high Water Fund balance can always be maintained with rates and fees, which can be increased without raising taxes.
To assist the enterprise funds in covering what at first will equate to a new expense from their general budgets, the city offers instructions. The second bullet point is particularly curious.
Where appropriate, user fees will be set at a level sufficient to recover the full costs of the program or service.
Non-regulatory user fees shall be set at a level that is competitive in the marketplace and strives to recover full costs (direct and indirect costs, such as depreciation or usage costs associated with capital assets) except when:
• free or subsidized service provides a significant public benefit;
• the City has determined that it should influence personal choice to achieve community-wide public benefits;
• full cost recovery would result in reduced use of the service or limit access to intended users thereby not achieving community-wide public benefits;
• the cost of collecting the user fees would be excessively high;
• ensuring the users pay the fees would require extreme measures.