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What does a municipality do with $3.1 million of spare cash?  New York State says keep an amount equal to a quarter of your annual operating expenses of it for emergency money, and either sock away the rest for future purchases or building projects, or give it back to the taxpayers.  After several tries by past Supervisor Kathy Miller to get a fund balance policy in place, Supervisor Ed LaVigne and the Town Board are putting together fund balance and reserve policies that will meet state guidelines, and save for the future.

"The Town is in excellent shape financially, because we run it like a business," says LaVigne.  "When you do that you don't overextend yourself to the point where you are so vulnerable to large economic swings.  This (Tuesday's PSC decision to kill the Cayuga Power Plant repowering plan), I daresay, is an economic swing.  What the ramifications of this will be, we'll have to wait and see.  Right now we will methodically go forward, like a turtle does, and when things get bad we hunker down.  And when things are good we chug ahead.  That's why you run municipalities like businesses, because of outside forces.  If you're not prepared for that you're going to be in some deep trouble in a very short period of time."

Putting it simply, the fund balance is revenue collected -- it may be tax money, fees collected, interest on investments -- each year that isn't spent.  Over the years Lansing has accrued $3.1 million in its fund balance, but has been remiss in funding reserves.  Over the past four years Miller tried to get the board to institute a fund balance policy to distribute the spare cash into reserves, but fundamental differences between Miller and LaVigne, then a councilman, on how projects and major purchases should be funded left them at a deadlock.  Last week the new board appeared to be in general agreement on the plan LaVigne proposed.

Lansing's budget operates across four funds.  The A (general) and DA (highway) funds pay for town-side services.  The B (general) and DB) highway) funds pay for services in the parts of the Town outside the Village of Lansing.  LaVigne presented a draft fund balance policy to the Town Board last week that combines the five year averages of real spending to come up with a base number.  He then got information from Highway Superintendent Charlie 'Cricket' Purcell on what real spending in his department is projected to be, and merged those numbers with the five year averages.  He took the three most expensive months in the Highway Department's annual spending to come up with a number somewhat higher than the recommended 25% of annual spending recommended by the State Comptroller's Office.  he also approached the other departments to see if they have spending deviations during the year.

"I would like to be conservative about this," LaVigne says.  "  I tried to find the three most expensive months of DA and DB fund expenses.  Most of the departments' spending is pretty consistent.  When I talked to Cricket, the DA fund comes out to be about 38%, or $500,000, of the total operating expenses for that fund.  You look at the DB fund it was $700,000 which is 53%.  It's not your typical 25%.  The average for the DA fund $317,000, but our amount is actually $500,000 because of the information Cricket gave us on actual use."

He then proposed actual dollar amounts to fund existing reserves and two new reserves the Board might consider.  A building repair reserve would come out of Fund A fund balance.  This reserve looks ahead 50 years for projects like an addition to the Town Hall to handle growing court usage and insufficient storage space.  LaVigne proposes building this reserve from its current $107,238 to $150,000.  Two other reserves using 3 year replacement cycles would fund Parks & Recreation equipment, building the reserve to $15,000, and Technology at $12,000.  A new reservewould fund 'Contents' -- the equipment and furniture inside town buildings at $18,000.

LaVigne also proposes funding a Highway Equipment fund from the DA fund balance to the tune of $200,000.  That fund currently has $5.13 in it.  Also taken from the DA fund balance would be a new Road Paving fund to be funded at $785,000.  All the proposed dollar amounts are the minimum each reserve would be funded at.

Planning for equipment replacement is obvious.  Capital projects are less so.  While you can predict the average lifespan of a roof, new buildings and additions must be planned for years in advance if you do not intend to incur debt.  Town officials considered an addition to the Town Hall to address the Town Court and storage issues, but LaVigne says that by rearranging the way things are stored in existing spaces that issue has been solved for the short term, at least.  He spoke to the Town Justices and concluded the project could be put on indefinite hold.  Another capital project is a proposed bathroom and shower facility at Myers Park.

LaVigne said he does not want to save taxpayer money in reserves just for the sake of saving it.  He said each reserve must be tied to specific projects, and the remaining fund balance will be used for emergencies.

"That (the bathroom and shower project) is estimated to be a $60,000 project," LaVigne said in a Town Board Working meeting last week.  "Let's say hypothetically that we sock away $12,000 every year.  In five years we'll have achieved that goal.  Or we sock away $15,000 every year and in four years we'll have achieved that goal.  That, to me, is a specific need, and if we have the money we would allocate such funds each year."

Councilwoman Katrina Binkewicz said the Town should consider funding an additional reserve for land purchase.  She proposed it could be funded by the proceeds of the sale of land across the street from the Town ball fields that has been considered a possible location for a town center.  LaVigne is interested in selling that land, but the Board is discussing how they want an up to date land appraisal to be configured before they put it up for sale.  She mentioned a long-discussed project to make the three-way intersection of East Shore Drive and Ridge Road into a four0-way intersection leading north from East Shore Drive into Conlon Road.

"We should think about socking away some money into a fund from land we sell for other land we might want to purchase," she said.  "Whether it's a cut-through for a proper intersection, or some micro-parks, or having it on hand to support connecting trails to the Greenway in the Village.  And we might need technology reserve funds to get our records into cloud-based storage."

LaVigne said that he is not proposing reducing that reserve.

"I'm proposing adding to it," he said.  "Because we don't know what is going to come.  If we have one-time allocations there are some of these things that can be put to those specific purposes."

LaVigne presents himself as strong fiscally conservative, but says he also doesn't want to underfund legitimate needs in Town services.  While he started with the idea of keeping 25% of annual expenditure (or three months worth of emergency cash) in the fund balance, other board members said they would be more comfortable with more,

"Last year we had the consultant that Kathy brought in and he gave us a recommendation of 20%," said Councilman Robert Cree.  "You take a regular finance course and typically they'll say you should keep about six months worth.  So there's a huge range we can use.  It comes down to what the Board is comfortable with."

Binkewicz noted that an Association of Towns training manual for new Town Board members says that the larger a municipality is, the smaller fund balance it needs to maintain because its budget, overall, is larger.

"But we're going forward into an uncertain future," she said.  "We still don't know what's going on with the power plant.  I would feel more comfortable keeping the fund balance closer to six months than three."

Cree said that with a reserve policy that actually funds the reserves an argument could be made that you don't need six months worth of cash in the fund balance.

"Because you've already identified funds for specific purposes," he said.  "So now maybe we should be more comfortable with 20%.  The initial question is what do we feel comfortable with as a total?  All accessible funds together?  And then break that out and find out where our holes are."

"The other question is can we afford to maintain that level of support in the next year," Binkewicz added.  "Is it a one-time major adjustment or are you going to put in the same amount each year?"

Cree said it would be a combination of both.

Town Attorney Guy Krogh recommended also considering a tax equalization fund that could be used to keep the tax levy lower in lean years or years where there are major expenses.  In the wake of this week's PSC decision not to approve the Cayuga Power Plant repowering plan, the school district is also hoping to establish a similar reserve fund.  Krogh said that the Town already has the authority to establish such a reserve under the General Municipal Law, while the school district would need a state law to be passed to give the district special dispensation to create a tax-mitigation reserve.

"That might be appropriate to deal with whatever happens with the power plant," he said.  "You can dip into it in years where you have an unusual expense, rather than increase your taxes.  You can dip into that reserve fund to make your budget whole.  Then in the next year when you have excesses that are lowering your tax rate, you hold it steady and put money back into that tax balancing fund.  That's a tool.  Using a reserve fund to deal with that uncertainty might be a little better than arguing with the Comptroller about why you did it."

LaVigne said he wanted to have a fund balance policy in place within three months, and pass a reserves policy in the following three.  But board members agreed that you can't separate the policies, and agreed to consider them together.  Cree said he is comfortable with the draft fund balance policy LaVigne presented, and said the board can work from that to build out the specifics of what minimum dollar amounts will be assigned to each fund, and which new funds should be added.  The Board agreed to talk more specifically about the reserves at next month's working meeting.

"My hope is that if the fund balance is above that next year we start taking some of that money off of the top," LaVigne said.  "I'd rather be overly-cautious than jump on this and just chop everything."

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