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(Photo by Gwen Sour)
From left, prior to the committee meeting on Monday night, Marietta City Councilman Bill Gossett explained documentation to Council Clerk Michele Newbanks and Councilman Harley Noland.
(Photo by Gwen Sour)
From left, prior to the committee meeting on Monday night, Marietta City Councilman Bill Gossett explained documentation to Council Clerk Michele Newbanks and Councilman Harley Noland.
Marietta City Council continued its discussion on establishing a stabilization fund to protect the city’s financial health during economic downturns on Monday evening.
Council members reviewed multiple definitions of stabilization funds and debated how to best implement the policy. The discussion, led by Councilman Mike Scales, focused on ensuring the fund is in place soon.
“We want to move forward with this as soon as possible so we can start preparing for economic fluctuations,” Scales stated.
Council members were provided with a draft of five different definitions for a stabilization fund and were asked to determine which best suited Marietta’s financial needs:
* Reduction in Local Economic Activity — A period with declining business revenues, failing consumer spending, and a slowdown in local commerce. Due to a natural disaster, or a declaration of a state of national emergency
* Rising Unemployment and Business Closures — An increase in unemployment due to closure of business, thus reducing the income tax/property tax.
* Decline in Tax Revenues — A downturn reflected in income tax collections, which limits the city’s ability to fund public service and infrastructure projects.
* Depreciation of Property Values — A period characterized by failing real estate value, impacting the long-term real estate revenue
* Decline in Infrastructure — A downturn characterized by reduced municipal spending on maintenance/projects for streets, police, fire, water and sewer.
A key point of discussion was a financial chart prepared by city Budget and Procurement Director Mitch Dimmerling, which outlines revenue projections and potential contributions to the fund. Although Dimmerling was out of town, Scales had reviewed the data and plans to present a more detailed analysis next week. The initial projections suggest that setting aside 12% to 18% of revenue into the stabilization fund could be feasible. However, there were concerns about balancing this with other priorities, such as infrastructure and preliminary engineering expenses.
In addition to defining the fund’s purpose, council debated governance issues, including whether a simple majority of five votes, rather than a supermajority of six, should be required to approve fund withdrawals. The ordinance draft, which City Law Director Paul Bertram III said he is creating, will incorporate council feedback before being introduced next Thursday.
Councilwoman Erin O’Neill raised a question about whether natural disasters should be treated separately from economic downturns in the policy.
“If a flood or another disaster occurs, that might need to be handled differently than a general decline in the local economy,” O’Neill noted.
Others agreed that disaster-related expenditures might need distinct guidelines.
Councilman Harley Noland emphasized the importance of ensuring that the fund is not used to delay necessary budget cuts in the event of a long-term economic downturn.
“We need to make sure that the fund is used to stabilize the budget against cyclical changes, not to postpone difficult but necessary decisions,” Noland warned.
Several council members referenced the state’s stabilization fund model, which is based on 10% of the previous year’s fiscal budget. While Marietta may not be able to match that percentage, council aims to establish clear guidelines for maintaining and utilizing the fund.
Moving forward, council plans to meet with financial experts to refine the policy and finalize the ordinance. The goal is to have the stabilization fund ordinance in place by early April, with the first eligible deposits occurring later in the year. Further discussions are expected in the coming weeks as council members finalize the policy framework.