I happened upon the recent Frankfort City Commission meeting via live stream and caught the discussion between the city’s auditor and the commission, which was previously reported on The State Journal on Tuesday, Dec. 17. The main takeaway for me was that the city’s cash reserves increased almost $3 million from last year, to a total of $17.9 million.
On the surface, this seems like wonderful news. After all, having a large surplus is better than being in the hole, and for that I commend the commissioners for being mindful of our tax dollars. But being too cautious is also a problem, especially in today’s low interest rate environment.
When the auditor acknowledged that the commissioners were being good stewards of the money, I think what was meant is that the reserve fund was being invested safely, and I trust that it is. My interpretation of the auditor’s report was that the cash reserve is too large, and we need to start spending.
Citizens of Frankfort expect their tax dollars to be allocated in a way that maximizes public benefit, not parked in an investment account earning very little interest. Therefore, I strongly encourage the City of Frankfort to invest some of these funds in key projects that will help Frankfort grow, thereby increasing future tax revenue.
As a professional investor responsible for the management of other people’s money, I tend to think of the city commissioners as directors of a corporation, and taxpayers are the stockholders. If that board is sitting on huge cash reserves and not putting it to work to grow the business, then they are not fulfilling their obligation to the stockholders. The company should be investing in facilities, its employees or research and development that will move the company forward and create future profits. To sit on such a surplus should make shareholders question their company board’s vision and leadership.
Failure by the city commission to spend some of that large reserve fund is doing a disservice to Frankfort. There are many ways to invest the reserves to help grow our community, while also improving our quality of life: implementation of the Downtown Master Plan; infill development and revitalization that strengthen our city core; recruiting workers in key industries (see Vermont or Topeka, Kansas); or further improving our already award-winning parks system.
Of course, there are other need services that may not necessarily spur growth but are still critical, such as a new animal shelter.
Frankfort is at a tipping point. There is an energy in our community that I have not seen since moving back home 15 years ago, but a continuation of this trend is not yet certain. Frankfort needs to seize this moment to ensure we do not fall further behind surrounding communities. Staying stagnant really means we are going backwards.
There is no shortage of ways we can invest our surplus to create more growth. To sit on the taxpayers’ money is not being responsible to the citizens. I would rather the city waive my tax payments for the next year and I will invest the funds myself. I am sure others would agree. So please, city commission, be good stewards of our tax dollars. Put it to work to improve Frankfort.
Layne Wilkerson is a Frankfort financial adviser. He can be reached at email@example.com.