Dr. Steven Frates on City Reserves
From Brooke Edwards’ article in the Victorville Daily Press:
“Reserves allow cities to have some financial flexibility,” said Steven Frates, senior fellow with the Rose Institute of State and Local Government at Claremont McKenna College.
The general fund is typically used to balance other city funds that don’t perform as expected, such as Victorville’s development impact fees fund, which is currently $22 million over budget, or, Frates said, in case a high tax-revenue generator such as a car dealership closes down.
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A low reserve can also mean higher interest rates on those loans or on bonds, Frates said, such as the $69 million in bonds recently taken out to cover projects at SCLA.
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