By Sean Rice
srice@dailystandard.com In an attempt to squeeze more revenue from city funds, Celina City Council members are considering designating $3 million as inactive so more cash can be invested in interest-bearing accounts for longer periods.
City council's finance committee members discussed investment options with City Auditor Pat Smith on Friday afternoon, and an ordinance before the full council that would make $3 million available to Smith for longer-term investing.
Currently, Smith invests in certificate of deposit (CD) accounts, government bonds or other money market funds for short periods of time, between six months and a year. Longer-term investments earn higher interest rates, currently an extra percentage point or two on a two-year investment.
Council member Denny Smith said he was "uncomfortable" with allowing $3 million to be locked up in a fund of the auditor's choosing. Member June Scott asked if the city budget is "flexible" enough for longer investments.
Finance committee chair Rick Bachelor said most available funds for investment are in the electric fund, where approximately $4 million goes unspent annually. Smith said he will not be investing in a single chunk, and probably will not go out any longer than two years. The maximum city law allows is five years. Smith said he uses a "ladder" approach to investing, and used an example of investing $500,000 in a two-year treasury bond today, and then making a similar investment in a few months. That method allows him to take advantage of changing rates while assuring not all funds are tied-up at once.
Finance committee members also have been working on an update to the city tax ordinance to comply with state and federal changes. Members are also adding a provision that makes lottery winners responsible for income tax. The inactive fund investment ordinance is up for a second of three readings when council meets June 14. |
