It’s good to save money, but the Haines Borough’s accumulation of $1.4 million in a permanent fund “earnings reserve” begs some big questions.
The earnings reserve is money left over from years when the manager and assembly choose to not spend all the interest they are entitled to put toward the annual, borough budget. The budget pays for things like our police department and swimming pool.
There’s an argument for keeping some money in an earnings reserve to cover years when permanent fund investments bring little or no returns. But $1.4 million? For the past six years, the fund’s expenses – management and inflation-proofing – have averaged $160,000 annually. That’s roughly the amount the borough would have to cover if a year’s investments brought zero returns.
Speculating that fund investments brought no income for three years – a very unlikely scenario, as the borough can shift funds in its investments – $500,000 would be enough to maintain the fund through such a dry spell.
While it’s not apparent why the borough would hold $1.4 million in an “earnings reserve” when government expenses are climbing and services are being cut, it’s easy to see who benefits from it.
Government officials – like managers – like to tuck an ace in their sleeve when it comes to budgeting. That way they’ve got a little something extra when money is short or when an item they like needs funding.
The problem with this arrangement is that it amounts to bureaucrats squirreling away your money to make their lives easier, rather than returning that money to you – the taxpayer – in the form of either additional services or reduced taxes.
Stashing money in the earnings reserve also fits neatly into an old narrative around here: That the borough is broke. That claim works for politicians when you show up at a meeting asking for something they don’t want to fund.
But it’s a distance from the truth.
If you find yourself at the cutting edge of a Haines Borough budget reduction this year, you might raise some questions about why we are building a second permanent fund within our permanent fund.
-- Tom Morphet