It is an act of good faith between government and taxpayers that taxes should never be much higher than is necessary, so when a Dispatch examination of city finances over the past three years revealed that the city has accrued a cash stockpile of almost $18 million it was certain to raise eyebrows.

The good news is that the surpluses were not a deliberate act of over-taxing residents. Instead, the funds are a combination of higher than expected sales tax revenues and budgeted positions in the police and fire departments going unfilled.

As the city begins preliminary work on the 2024-25 budget, it’s important that the city does a better job in forecasting revenue and expenses more realistically. It is painful to realize the city is paying nearly $1 million in fees and interest on its $3 million parks bond, especially when it will have nearly $18 million in its back pocket.

The situation presents the city with two problems: 1. How to plan for and manage surpluses in the future; 2. What to do with the $18 million, which will likely be sitting in the general fund at the end of this fiscal year.

To put it in context, the general fund balance is roughly equal to the projected total city expenditures for the current fiscal year. In theory, the city could give taxpayers a year off and have enough to cover expenses, although no one would seriously suggest that.

There are likely to be any number of suggested uses for the $18 million, everything from pay raises, to paying for the completion of Terry Brown Amphitheater to repairs to city buildings to a tax cut.

Fortunately, the city has a pretty good model for how to best leverage this windfall right here in Lowndes County. Two of the best decisions the county made over the last 30 years was creating a trust fund with the $30 million it received when it sold the county-owned hospital and getting state approval to invest those funds in the stock market 10 years ago. Since 2014, the county has withdrawn more than $7 million for capital expenditures while increasing the trust fund balance to $38 million.

Initially, supervisors were divided on how to spend those profits. Some suggested using it to fund pay raises and provide other benefits for employees. To his everlasting credit, then-board president Harry Sanders was adamant that every penny be spent on capital improvements. Over the past 10 years, the county has built community centers, a new justice court building, a new E-911 center and most recently the new county-owned baseball complex with trust fund revenue.

The county will continue to reap benefits from the trust fund in perpetuity.

The city would be wise to consider a similar long term plan.

In 2023, the S&P 500 was up 24%. Hypothetically, if the city had just $12 million in a similar trust fund at the beginning of 2023, it would have ended the year with nearly $15 million in the fund. Withdrawing 3% at the end of the year – similar to the county plan – would have given the city nearly half a million dollars to spend on capital improvements while also growing its fund balance.

We believe that whatever plans the city adopts, a substantial capital expense fund should be part of the equation.

The fund balance represents a rare opportunity. This is not something that should be resolved in a council meeting as routine business.  It should be addressed in such a way that the taxpayers have a say in the matter and that all suggestions are thoroughly vetted.

The city needs to make the most of this $18 million opportunity.

The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.