BY B.G. GREGG
The Cincinnati Enquirer
Hamilton County plans to increase its emergency reserves from $15 million to nearly $20 million in the next few years.
County officials want a reserve that equals 10 percent of annual expenditures ($195 million in 1998), just in case of emergency.
"When you do a budget, you're estimating a dollar amount for expenditures and you're also estimating a dollar amount for revenues," said David Krings, county administrator. "If you're doing a $200 million budget, you have $400 million worth of estimations.
"To think that any business should operate without a reserve fund is absurd."
County Auditor Dusty Rhodes agreed. "The problem that government has is that they have to live off the shelf until the tax revenue comes," he said. "This gives them a little bit of flexibility."
In addition to better equipping the county to handle emergencies, the additional money should help ensure continued good ratings from investor services.
"We would expect that entities would keep a strong financial cushion," said Yaffa Rattner, vice president and senior credit officer at Moody's Investors Services.
Hamilton County, along with three other Ohio counties, has an Aa2 rating from Moody's. Only one county in Ohio has a higher bond rating, and that is Franklin, at Aaa.
Mr. Krings said the reserve money can also be used to borrow from before obtaining bonds for capital projects.
The reserve is part of the county's general fund. Early in the 1990s, commissioners set it at $15 million. It has remained that way until now.
"That is a cash-flow situation to protect yourself from some kind of problem. You can't live without a reserve," said County Commissioner John Dowlin
Suzanne Burck, the county's director of administrative services, said the county recently surveyed other municipalities to see how much they kept in reserves, and 10 percent of the previous year's expenditures was a common amount.
She said the county most likely will not come up with an additional $4 million to put into the fund this year. "If it takes a couple of years for us to phase it in, then we'll do so," she said.
Shawn Bullard, a spokesman for the National Association for Counties, said nearly every county in the nation has a reserve fund, and it usually equals 5 percent to 7 percent of annual expenditures.
