April 17, 2023 |
Photo – Rawlins City Hall – Bigfoot99 file photo
Springtime brings with it warmer weather, melting snow, and budget meetings.
Municipalities in Carbon County must balance their budgets and prepare for the next fiscal year during the annual spring budget process.
During last Tuesday’s Rawlins budget planning workshop, Interim City Manager Tom Sarvey briefed the council on the city’s finances. Sarvey said the city has around $33 million spread over 25 bank accounts. He said the money is sitting idly and noted the capital is barely generating interest.
Sarvey said the city only made $72,500 in interest, last year. Goldman Sachs, a global investment group, offers a 13-month annual percentage yield of 3.75%. Sarvey said the city should be collecting far more interest money than it is.
Sarvey said the state’s newly adopted Amendment A, allows towns to invest funds in stocks and equities. Also known as the Local Government Stock Investing Amendment, it was passed on November 8th of last year. The interim city manager said the city could piggyback on state investments to generate even greater interest returns.
Sarvey said the state hasn’t opened its investment fund, WyoStar, to towns yet. Sarvey said he isn’t sure what kind of return the state was receiving on their investments, but that 4% may be on the low side.
Sarvey said the city needs to put procedures into place to support investments. He said they also should develop a system for predicting cash flow, so money doesn’t sit in low interest accounts. Sarvey said the city needs modern banking solutions.
Vice Mayor Steve Sanger said the average 100-year return on a Standard & Poors stock is 10%. Sanger asked why the city should be happy with only 4%. Sarvey said the state investments have relatively low risk.
Sarvey said the debate on Amendment A, focused on whether towns have the right to play the stock market with public funds. Vice Mayor Sanger said investing in S&P stocks is a safe bet. He said compared to other states, Wyoming should be able to guarantee higher returns.
Sarvey said he wasn’t aware of the person the Vice Mayor was referring to, but he agreed that higher risk investments have the potential for higher returns. Mayor Terry Weickum said the state may be limited to low risk, low yield stocks to minimize loss. Vice Mayor Sanger said the state has the money to purchase higher risk stocks, which the city could benefit from.
The city must have a certain amount of quickly available, or liquid, cash on hand for emergencies. Sarvey said he has come up with a three-pronged investment strategy to ensure the city has both liquidity and larger interest payments.
Sarvey said short-term stocks would allow the city to access cash faster, but won’t generate as much interest as long-term investments. Vice Mayor Sanger asked what kind of return Sarvey was anticipating. The interim city manager said if the city split its $33 million up in a certain way, returns could be above 4%.
Councilman Chris Weisenburg said any percentage is better than what the city is receiving now. Sarvey said he considers the amount of return the state is getting to be good. Councilman Weisenburg said switching banking techniques is an easy choice.
Sarvey said the city needs to alter the way it handles money, as soon as possible. He said he anticipates a quick and easy change. The interim city manager said he already added about $240,000 more, in interest payments, into next year’s budget.
