According to Brownwood City Financial Director Walter Middleton, interest income is significantly decreased from recent years and is hurting municipal budgets.
Due to the economy, investments are just not earning what they have been in the past. In fact, this quarter, only $2858 was earned by the City of Brownwood on approximately $7.1 million. This is down $90,245 from interest income of the same quarter of 1995.
Middleton stated that investments can be moved to a higher paying account, but that his primary concern was the safety of the City’s principle. The second concern is liquidity especially in financially challenging times; these investments cannot be tied up in long-term accounts. Return on investment (ROI) is very important but sometimes the safety of the funds is more important.
“We don’t want to tie this money up in long-term funds where I could earn considerably more than this, but then I wouldn’t be able to get to it,” stated Middleton. “I need to protect this and I need to be able to get to this (money in these investment funds).”
Haynes pointed out the difference in the 1995 ROI of $90,245 versus the current $2858 ROI.
“It makes a difference of over $85,000 each quarter, so you can see in difficult times how it affects the city,” said Haynes.
“This difference is $350,000 less in 2011 than in 2008, that affects us greatly in our budget,” stated Middleton.
