The town of Garner has an interesting line item in its budget. Called Revenue Savings, the money in that account is held back from the town’s routine operating expenses and set aside for future use.
Where that money comes from is the surprising thing. If you just consider the name, you might think that the town has cut its expenses – thereby saving revenue – and is putting the unspent money in savings. That wouldn’t be uncommon. Towns often look for cost savings and use the money for other purposes from savings to operating expenses.
But that’s not where this money comes from. Town leaders expect the town to grow each year. As new homes are built and new businesses arrive, the town grows and the town’s revenues from taxes on those new buildings grow. A certain part of that growth adds money to the town’s coffers and the town spends it to cover the increased cost of serving the people who live in those homes or operate those businesses.
But in good years, the growth may exceed what the town expects. When that growth rate is higher than expected, the Town of Garner takes a portion of the unexpected extra money and sets it aside. The town uses that money to help pay off the bond debt it accumulated in 2013 when voters approved a $35.7 million bond issue.
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Having that money set aside is good for Garner for a couple reasons. First it helps guard against future years in which growth may not be as strong as it has been the past few years. No one has likely forgotten the trauma of the recession which began in 2008 and put everyone’s budget in a pinch. Having this additional money helps the town protect its other financial assets and keeps them from having to dip into other funding sources to pay for the bonds from three years ago.
And having that money set aside also helps position the town for additional growth. The next time Garner leaders decided to float a bond, they will be able to reduce the amount they have to borrow because they’ve been able to set some aside.
Not every town is fortunate enough to be able to afford such a revenue savings plan. Every dollar is needed to keep police on the streets and the lights on at town hall.
Garner has been fortunate and the establishment and continued funding of the revenue savings plan will help ensure that the town is ready for whatever is down the road.