The use of Highland Park’s cash reserve became an issue once again Thursday at a budget workshop as the City Council waded into the 2012 budget presented to the Council Sept. 29 by City Manager Dave Limardi. 

The proposed budget included the use of approximately $510,000 from the city’s cash reserve for capital improvements to the Highland Park Public Library in lieu of an increase in the property tax levy. The Council raised taxes a year ago to help pay for the library’s needs. 

When the subject of the library was raised during the workshop, the Council went beyond the initial proposal. Limardi was asked about the library’s capital needs beyond 2012 and told council members that $2.5 million would be needed to bring needed maintenance up to date. 

“There is a lot of deferred maintenance,” Councilman Jim Kirsch said referring to the library’s needs. “This is not a onetime make-up. It needs a lot and we may have the same discussion next year.” 

 With the current fund balance in excess of $36 million, Mayor Nancy Rotering asked Limardi the effect of budgeting the entire long term project from the current reserves. Limardi reported the move would reduce the balance from a year end projection of 48.7 percent of operating expenses to 39.8 percent. 

The City Council gave Limardi tentative approval to make that change to the budget, though there was disagreement among the members about the overall use of taxes and the fund balance. 

Councilman David Naftzger not only wants to use the money for the library, but wants a long-term plan to reduce the balance to 25 percent, the current minimum considered acceptable by the Council. The existing policy calls for a minimum between 25 and 33 percent. 

“The library has real needs and we should be forward thinking about this in the bigger picture,” Naftzger said. “We should have a long-term financial plan to take more from our current fund balance to where we are at 25 percent.” 

The use of reserves was a contentious issue as the Council grappled with the 2011 budget. Rotering, then a councilwoman, opposed both the tax increase and budget. She preferred spending less. 

Though she now favors the use of the reserves for the library, she wants a higher balance. 

“This is not the time to draw the fund balance down to its minimum level,” Rotering said. “Twenty-five percent has historically been the minimum level of fund balance targeted by the city. Given the continued volatility of the economy, city resources are being stretched more than ever with no definable recovery in sight.”

Naftzger, who wants to keep taxes as low as possible, did not share Rotering's concern about reducing the fund balance to a minimum level. 

“The fund balance is for emergency use,” Naftzger said. “We should keep taxes low,” he added when asked if he would increase revenue in the event an urgent situation caused the fund balance to dip below the minimum. 

Kirsch strongly opposes the idea of keeping the City’s fund balance at the 25 percent minimum. He thinks the current economic uncertainty is a reason to consider increasing the numbers. 

“It’s a terrible idea,” Kirsch said of the lower figure. “Some of our experts have suggested we have a balance as high as 50 percent,” he added referring to a report the Council received from its auditors in June. 

Rotering’s opponent for mayor in April, former Councilwoman Teri Olian, was against higher taxes but argued for the use of reserves to balance the budget rather than cut expenses. Along with Rotering, only Councilmen Steve Mandel and Kirsch remain from the legislative body that passed the 2011 budget.

The Council passed last year's tax hike, 4-3 with Rotering and Olian voting no, and the budget, 5-2.