Move $600,000 to reserves, LR staff to ask city directors

City staff members plan to eventually ask the Little Rock Board of Directors to send $600,000 of net income from last year to the city’s reserves, Finance Director Sara Lenehan said Tuesday.

Little Rock’s net income from its general fund in 2013, after transfers of funds into other designated accounts, totaled about $1.6 million.

The year’s general revenue, before transfers occurred, was $180.2 million - 0.6 percent more than the budgeted amount. Expenditures for the year totaled $168.7 million - or 0.6 percent below what was estimated. The figures are pending an annual audit.

Originally, the city had budgeted $1.7 million for contingency and reserve funds in 2013, but in November the board amended that line of the budget to zero because finance employees said the money was needed to balance expenses and revenue for the year.

However, most of those funds weren’t needed.

Lenehan has suggested sending the $600,000 to reserves, which would raise the reserve balance to $10 million. The remaining $1 million would stay in the general fund to facilitate cash flow needs and would remain there as part of the starting balance each year.

At-large City Director Dean Kumpuris suggested that after using the $1 million for cash flow needs, it be distributed to the reserve fund at the end of the year or be added to revenue from the 2011 voter-approved 1 percentage-point citywide sales tax increase. The tax revenue’s designated use is split between operations and capital-improvement projects.

The growth of revenue from that sales-tax increase has consistently come in below the city’s initial 2 percent annual growth projection. Revenue from the tax increased just 0.75 percent in 2013 from the year before.

City directors questioned Tuesday when will be the time to re-evaluate the growth projection and what strategy the city will use if it has to reallocate promised funding to various capital-improvement projects that were listed in the request voters approved.

City Manager Bruce Moore said such a discussion needs to take place in mid-2015 and that if the growth hasn’t caught up to projections by then, each project may receive a percentage of what funds are committed to it now under the annual 2 percent growth assumption.

Now, a project or area designated to receive a certain amount of money over a10-year period gets a pro-rata share of that each year. In other words, a project promised $1 million over that span would receive $100,000 a year. For some of the projects, Moore mentioned the possibility of requesting that the city board approve short term financing to complete them immediately, rather than waiting for their full funding amounts to accumulate.

The audit of city finances will begin in April and should be completed by the end of May, Lenehan said.

She gave the year-end report to the city directors at Tuesday’s meeting to set the agenda for next week’s board meeting.

At the Tuesday meeting, the board is set to consider hiring a construction company for renovation of the future police substation at the Josephine Pankey Community Center on Cantrell Road and to discuss legislative topics the city will ask the Arkansas Municipal League to lobby for in 2015.

The meeting will take place at 6 p.m. at City Hall.

Arkansas, Pages 10 on 03/26/2014

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