An agreement by the Killeen City Council on Tuesday to lower its reserve fund range citywide could put the city in danger of not being able to pay its bills in the event of a natural disaster, City Manager Ron Olson said.
The council reached a 4-3 consensus Tuesday to lower every city fund’s targeted reserve range from 22 to 25 percent to 18 to 22 percent of expenditures as a means of freeing millions of dollars for operational and capital expenditures each year.
But lowering the reserve range limits the city’s ability to pay for disaster recovery efforts in the event of a natural disaster or other emergency.
Mayor Pro Tem Jim Kilpatrick and Council members Gregory Johnson, Shirley Fleming and Juan Rivera voted to lower the target range.
The decision came as part of the council’s deliberation on a new financial policy package that will act as a one-stop shop for city spending and management guidelines.
The proposed policy stipulated every fund in the administration have a maximum reserve of 25 percent, with extra funds being redirected to associated capital improvement funds.
But following a proposal from Kilpatrick, who asked for information on lowering the targeted range at a workshop Nov. 14, the council agreed lowering the range would not hurt the city’s municipal bond rating and would free more than $2 million a year for operational expenditures.
Olson, however, said the move would impede the city’s financial response to a natural disaster.
“When you’re faced with a massive disaster, you have to run the city without outside help,” Olson said. “(The current policy) gives you three months. The best you can ask for is to get FEMA money back in around three months.”
While the city has not recently experienced a disaster scenario, the possibility of one is not unheard of.
In 2015, a 180-foot-wide, EF-1 tornado nicked the west end of Fort Hood and struck mobile homes in the Kempner area west of Killeen.
While that tornado did not result in any deaths, an EF-1 tornado touching down in residential portions of Killeen could potentially cause loss of life and catastrophic property damage.
Councilman Jonathan Okray, who voted against the measure, saw the lowered reserve range as an ineffective way to create revenue and unsustainable.
“Don’t get wide-eyed and say we can put more money in (the capital improvement fund),” Okray told the council.
The council is expected to formally vote on the financial policy package at its regular meeting Tuesday.