Kelly Administration To Dip Into Fund Balance For $16.9 Million Capital Infusion

  • Wednesday, May 22, 2024

The Kelly Administration has unveiled a plan to provide a $16.9 million supplement to the Fiscal Year 2025 proposed Capital Budget "to accelerate project delivery and progress across areas of strategic focus like affordable housing, parks, infrastructure, public safety, and early learning."

Officials said, "The plan would be funded using a modest portion of the city’s surplus General Fund Reserves while maintaining Chattanooga’s policy of keeping a robust reserve balance that consistently outperforms reserve levels held by other similar cities.

"In 2006, the Chattanooga City Council adopted a policy requiring the city to maintain a reserve balance of at least 15 percent of annual general fund revenues and transfers in. This proposed drawdown would reduce the 34.8 percent balance to 30.9 percent, which is in line with peer cities’ practice and more than twice the amount called for in policy.

Freed reserves of $15 million plus accrued interest of almost $1.9 million totals almost $16.9 million in new capital."

Mayor Tim Kelly said, “Thanks to a long-standing record of responsible budgeting at the city, we have the opportunity to leverage the moment in a way that will accelerate progress in areas that Chattanoogans care about most.

"We’re proposing a calculated investment into our community to supplement our baseline capital budget proposal for FY25, knowing that we can afford it and believing that deploying a small portion of excess general fund reserves will help ensure the positive trajectory of our city without compromising our triple-A bond rating or our reputation as one of the most fiscally responsible city governments in America.

“With this additional infusion of funding, we’re going to be able to do even more with this budget - more to maintain and upgrade our parks, to meaningfully impact the supply of affordable housing, to execute on critical infrastructure priorities, to enhance public safety and to expand access to early learning. We’re confident the pay off for our future will far exceed this one-time cost.” 

Adoption of this additional investment is subject to approval by the City Council, who will consider it alongside the city of Chattanooga’s Proposed Budget for Fiscal Year 2025. 

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