September 04, 2014GROSSE POINTE FARMS — An extra $200,000 could be allocated for road repairs if the budget rolls smoothly.
Members of the city council authorized administrators to transfer budget surplus to the capital projects fund for road maintenance.
"This is preliminary," said John Lamerato, Grosse Pointe Farms finance director and controller. "Even though our fiscal year ended June 30, we won't have final results for a couple of months."
The transfer depends on the city achieving a 25 percent fund balance, a rainy day fund totaling one-quarter of the annual general operating fund.
"If our fund balance is over 25 percent, we want to transfer up to $200,000 of that money for road improvements," Lamerato. "That's what we did last year."
Although municipal auditors recommend cities strive for a 20 percent fund balance, Farms officials like to reach a few percentage points higher.
"Fund balance gives you a cash cushion," Lamerato said.
The cushion comes in handy if a big expense occurs during the gap between the end of the fiscal year and the Sept. 15 deadline for residents to pay property taxes, which account for 75 percent of municipal revenue.
"That fund balance gives us a cash cushion to get through those first couple months of the fiscal year," Lamerato said.