Rio Rancho Observer
Rio Rancho should create a permanent fund to generate more money for taxpayers in the future.
The city manager’s office and governing body are proposing to start a permanent fund with $10 million in reserve money being invested to generate income.
Each year, half the income would go into the general fund, which funds most city services. The other half would go back to the permanent fund to grow the amount invested and generate more money the next year.
For the permanent fund to be created, we’d have to change the city’s charter.
That means the charter review committee would have to recommend the amendment to the governing body, which would have to put it on the city election ballot next March. Then, a majority of voters would have to approve it.
Some people would prefer to spend the $10 million now on roads, public safety and/or parks.
We get that. But new roads and vehicles eventually wear out, parks need constant maintenance and police and firefighters need paychecks every few weeks.
Where would we get the money for all that after this year? That $10 million isn’t recurring income.
Permanent fund revenue would be.
According to city forecasts, a $10 million permanent fund would generate $338,500 for the general fund the first year. The amount generated would increase annually, with close to $753,000 for the general fund in the 25th year.
The 25-year total contribution to the general fund would be almost $13 million, according to city estimates. Those numbers would keep growing.
That’s more police officers, firefighters, parks, repaved roads, etc., in the long run than if we spend the $10 million now.
Rio Rancho Police Department was allotted more than $17 million, or 27.2 percent of expenditures, in the upcoming fiscal year’s preliminary budget.
Meanwhile, Rio Rancho Fire and Rescue Department is getting almost $13 million, or 20.4 percent of spending.
Within the Department of Public Works, more than $3.7 million is earmarked for streets and right-of-way, not counting engineering for road projects.
The Parks, Recreation and Community Services Department is getting close to $1.7 million for parks and facilities, according to the preliminary budget.
Given the existing prioritization for those important services, we need to grow the financial pie, not just provide one-time money, if we want more of them in the long run.
We ask that the charter amendment require transparency in tracking money in and from the permanent fund, for accountability and public trust.
We’d also like the city and charter review committee to consider:
• Is 50-50 the best split of earnings between the general fund and reinvestment in the permanent fund?
• Should the general fund portion be earmarked for specific uses?
• Is there a point when the permanent fund is big enough and all earnings should go to the general fund?
While those details are hashed out, we support moving toward a permanent fund.
Our community is holding a golden nest egg. We can either hatch a goose that lays more golden eggs, or make a single omelet out of it.
