Decatur has accumulated $3.5 million in excess funds. Should the money be given back to residents and/or spent on strategic priorities?

According to the most recent Treasurer’s Financial Report, the city of Decatur’s general fund ended January 2022 with a cash position of $16.5 million.  City council policy calls for the city to have a 60-day reserve of $13 million, an excess of $3.5 million.  The 60-day reserve was established to provide the city with a rainy-day fund in the event of emergency.  Ironically, the city’s cash reserve has grown considerably since the COVID-19 pandemic began.  In January 2020, the cash position of the city was $8.3 million which was equivalent to 42 days of cash reserves. 

Given that the city has increased the amount of funds it is collecting from property taxes in 2022 (~$750,000 in revenue) while simultaneously eliminating this year’s licensing fees paid by the video gambling industry (~$250,000 in revenue), a strong argument can be made that the city council should provide tax relief for its residents with the $3.5 million in excess funds. 

City council members began discussing how to use the funds at both its February 22 and March 7 meetings.  In general, three possibilities for the funds have emerged: 1) reduce fees and taxes for residents (e.g., reduce water bills and temporarily remove the local motor fuel tax), 2) use the money to further strategic priorities (i.e., current neighborhood revitalization initiatives are not keeping pace with the rate of blight), and/or 3) increase the cash reserve policy from 60 days to 90 days (i.e., continue accumulating excess funds until a $19.5 million cash reserve is reached).      

What do you think should be done with the $3.5 million in excess funds and why?