Most of you are aware that Indiana is not the only state where local government has come Michigan townships also have been weathering the storm of calls for elimination and/or Association’s publication, “Reforming Michigan’s Local Government”, is a good reference since many of the arguments for keeping services local are very much the same.
For example: Township Fund Balances (p. 28 of the report) states, “Townships generally carry larger year-end fund balances than do other local units of governments, often exceeding the Government Finance Officers Association (GFOA) recommended minimum, an amount equal to two months’ worth of operating expenses.
Unrestricted fund balances are like a family’s savings – it is money left over after all of the bills have been paid, and is needed to meet unanticipated obligations and emergencies, and to shore up services when revenue streams are disrupted, such as is occurring in the current economic environment. Fund balances allow services to be maintained in the short term without raising taxes.”
“Local government critics, including some in state government, have criticized township for carrying what they believe to be excessive fund balances and cite the GFOA recommendation as their objective source. This criticism misses a number of important points”.
The report continues with a list of positions, many of which the ITA has made on behalf of Indiana townships. Included in the list:
“Fund balances reported in local government audits are measured at their fiscal year-end. For the majority of township, the fiscal year ends just after property taxes have been collected, and the year-end fund balance does not reflect the township’s minimum fund balance but rather is measured when it is at the maximum level of cash flow that fluctuates throughout the year.
“Townships often accumulate additional resources in their fund balances as savings toward planned future large capital purchases.
“Townships and other smaller entities should maintain larger fund balances because they have less predictable patterns of expenditures compared to larger entities, and unanticipated expenditures that are easily absorbed in the budgets of larger governments can have a much more detrimental impact on a smaller budget.”
The report, in its entirety can be found at http://www.michigantownships.org/downloads/localgovernmentreformlowres.pdf
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