Why do governments have reserves?  Because they don’t go out of business. There is a difference between government accounting and commercial accounting.  That difference is that government keeps going on.  This is where people snicker and say government is dumb and so forth. It got you this far, right?  So, something is working.  In The Villages you have pools, landscaping, recreation centers, and entertainment, so life isn’t all that bad. 

Commercial businesses come and go, they buy assets and depreciate them over time.  If they decide to go out of business, or change drastically in some way, they can sell off or otherwise dispose of assets. 

A government cannot do that – its assets deliver services to the residents (think of a fire truck or a highway) and they cannot simply sell it or let it fall apart.  And, a government doesn’t go out of business. 

The assets of a government have to be maintained, at all times, and in good working order.  If a water line keeps breaking or a bridge becomes unsafe the powers that be usually hear about it quickly.  That is where reserves come in.  That depreciation that exists in commercial accounting, and is just a book figure, should be an actual cash balance in fund (governmental) accounting.   

If an asset is at the end of its useful life, either as a factor of time or from unexpected failure, there should be cash on hand to replace it if the governing board had the foresight to plan properly.  By the way, if a government suddenly needs a very large tax hike because they can’t pay for the failure of an asset you know that there may have been some bad planning along the way. 

In summary, governments have reserves because they don’t go out of business and have to always be sure that they can keep things running smoothly. 

I would add a clarification here about Sumter County.  The 25% tax hike of a few years ago was not because of an asset failure.  I read the financial reports and it seems that most of the spending was an increase for new budget items, an expansion of services.  I wasn’t all that disturbed by it; taxes were very low to start so 25% of next to nothing is very little. 

Moving on, The VHA continues to have monthly Bingo with cash prizes. In September we are at La Hacienda Recreation Center.  Admission is $10 and that gets you two game boards, if you show your VHA membership card you get an extra board free.  Additional boards, 50/50 tickets, and last game $100 prize blotter sheets are also available for sale. 

Mike Dollard, Vice President
[email protected]