City Manager Julia Carroll has told aldermen she will ask them to significantly increase general fund reserves in next year’s city budget.

Her recommendation Monday came the same day that the Chicago-based Civic Federation released a report showing that most municipalities in northeastern Illinois maintain far larger reserve or rainy day funds than Evanston does.

Ms. Carroll said Evanston now keeps reserves of a little over 8 percent — or enough to fund its programs for one month.

The Civic Federation study shows that on average muncipalities in the region maintained a fund balance of 19 percent as of 2003, the most recent year for which the data is available. Reserve levels ranged from 4.9 percent for Chicago to an average of 44.5 percent in the collar counties.

Ms. Carroll said that she hopes to raise the reserve to 10 percent next year, and that she’d rather have a two-month reserve — or about 17 percent of annual spending.

She said the financial rating agencies look at a 10 percent reserve as a minimum goal. While the city has maintained it’s top-level Triple-A financial rating, she said the rating agencies have raised concerns about funding of the city’s pension program and that because of that uncertainty she believes its important to shore up the city’s financial reserves.

The Civic Federation study reports that the Governemnt Finance Officers Association recommends that municipalities maintain reserves of 5 percent to 15 percent.

The study also suggests that muncipalities with reserves of 50 percent or more are setting aside too much and should consider retiring debt or reducing taxes to bring their income more in line with spending requirements.

Ms. Carroll said the city faces “structural budget deficit” issues in coming years because of rising electricity and fuel costs, increasing health insurance costs and forecasts that construction activity in Evanston is likely to decline as the housing market cools.

Bill Smith is the editor and publisher of Evanston Now.

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