How Much Is Too Much?

Vol. III, No. 183 - Some of Miami County's cities and villages are sitting on tons of cash. What's the plan for it?

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At the last meeting of Miami County Budget Commission, there was a healthy discussion on the unencumbered balances the cities and villages had carried over year over year, especially in the conversation of reducing property tax millage rates. Basically, the Budget Commission wasn’t a fan of local communities having huge amounts of money carry over year after year with no real plan to spend these balances down while still getting increased property tax revenue thanks to new property valuations.

In the meeting, two separate charts were handed out to the commission and those in attendance. A public records request was made and those shees were provided to this publication. This is the data that was provided on those handouts:

As the data shows, West Milton and Troy’s unencumbered balances have grown far beyond common best‑practice targets, while Piqua and Tipp City’s levels are much closer to what many finance experts would consider reasonable.​​

What fund balance is for

Unencumbered cash is the cushion a city keeps on hand to pay bills on time, handle emergencies, and ride out recessions without sudden tax hikes or service cuts. The Government Finance Officers Association (GFOA) advises general‑purpose governments to maintain at least two months of regular operating spending in unrestricted fund balance, which is about 16‑17 percent of annual costs. Many formal reserve policies use this range as a floor and then adjust up or down based on how volatile revenues are, how exposed a community is to disasters, and what other reserves and tools it already has.​

How balances have grown for Miami County’s hometowns

The Miami County Auditor’s data show that the four larger communities—Troy, Tipp City, Piqua, and West Milton—have all seen substantial growth in unencumbered balances since 2020, but not at the same pace. Troy’s unencumbered fund balance rose from about $11.5 million in 2020 to just over $30.1 million by January 1, 2025, an increase of roughly $18.7 million in five years. Piqua’s balance grew by about $4.8 million over the same period, while West Milton’s grew by about $1.7 million; Tipp City is the outlier in the other direction, with its 2025 balance about $0.4 million lower than in 2020 after peaking in prior years.​

These trends mean that today Troy’s General Fund unencumbered balance is actually larger than its initial 2025 General Fund appropriations, at about 105 percent of a full year’s budget. West Milton’s unencumbered balance is also above annual appropriations, at about 120 percent, while Tipp City and Piqua hold balances equal to roughly 44 percent and 43 percent of their 2025 appropriations.​

GFOA guidance and “six months” targets

GFOA’s long‑standing recommendation is a minimum of two months of operating expenditures, not a strict ceiling. In practice, that means governments often set policies in the range of 2–3 months as a normal band, with some large counties and cities adopting “floors” around two months and “ceilings” around three months; balances above the ceiling are often designated for one‑time uses like paying down debt or capital projects rather than sitting idle. A formal policy built this way aims to prevent both the risk of too little cash and the democratic problem of stockpiling public money without a clear purpose.​

Against that backdrop, Troy’s informal target of at least six months of operating cash in its unencumbered balance, on top of a separate investment reserve fund, is significantly more conservative than what GFOA presents as a minimum standard. GFOA would likely view six months plus a separate reserve as defensible only if Troy faced unusually high revenue volatility, major known risks, or extremely limited access to borrowing—which is not typical for a stable mid‑sized city with diverse revenues. When unencumbered balances exceed a full year of operating costs, as Troy and West Milton do today, they move well beyond “safety cushion” territory and squarely into a policy choice to defer services, investments, or tax relief.​​

State debates about cash caps

In this discussion, readers should be reminded that the recent Ohio budget put a statewide spotlight on how much public money should sit in local coffers. Lawmakers debated and ultimately moved toward caps on school district carryover balances, with one key provision limiting how much extra money districts can carry into the next year to about 40 percent of annual operating budgets before triggering property tax reductions or rate adjustments. Supporters framed these caps as a way to prevent large tax‑funded surpluses from building up without direct benefit to taxpayers, while many educators and advocates warned that too‑low caps would force cuts when costs rise.​

Even though these rules apply to school districts, not cities, the debate reflects a broader public concern: in an era of rising property taxes, utility bills, and basic living costs, residents do not want to see large idle balances grow while service needs and household budgets are under strain. When a city’s unencumbered balance consistently exceeds a year of spending, as in Troy and West Milton, it invites the same question state leaders are asking schools: at what point is the government holding too much of the community’s money in reserve.?

Which cities look closer to best practice

Looking at the four communities on the second sheet, Tipp City and Piqua are much closer to the kind of range that GFOA and many local policies consider healthy. Their unencumbered balances—43–44 percent of initial 2025 appropriations—roughly equal five months of spending, a cushion that is clearly above the two‑month minimum but not so high that it locks away the better part of an entire year’s operating budget. For a city with reasonably stable tax revenues and access to borrowing, this mid‑range approach matches how many governments use GFOA’s guidance: set a solid floor, allow extra cushion, but avoid accumulating more than is needed for cash flow, emergencies, and near‑term strategic priorities.​​

By contrast, Troy and West Milton have fund balances that now exceed a full year of appropriations, which is far above GFOA’s minimum and even above the level Ohio is debating for school‑district carryover caps. In practical terms, that means these cities could run their general funds for a year with little or no new revenue, using only cash on hand. That level of cushion may feel safe to officials but looks excessive to taxpayers who see rate increases and higher bills while their local government quietly banks year‑after‑year surpluses.​​

A different policy conversation

The numbers from the Auditor’s Office show that Troy’s current practice is not just “six months of operating cash.” It is more than a year’s worth of general fund spending set aside in unencumbered balance, plus whatever sits in the investment reserve fund, with no clear public explanation of how those dollars will be used or when they might be returned to the people who provided them. In that light, the six‑month minimum is less a guardrail and more an arbitrary floor that has not kept pace with actual growth in reserves.​​

A more appropriate policy would start with GFOA’s two‑month minimum and then set a reasonable ceiling, perhaps somewhere in the neighborhood of Tipp City’s current level. Council could, for example, commit to keeping at least three months of operating costs in unencumbered balance, allow balances to rise to six months when conditions warrant, and then require that any excess beyond that range be programmed for one‑time uses or direct taxpayer benefit within a defined period. That kind of framework honors the need for stability while making it clear that the city is not in the business of stockpiling cash simply for its own sake.​​

Putting taxpayers back into the picture

Residents are already feeling the squeeze from rising property taxes, utilities, and everyday costs, and many see growing city balances as a sign that local government is more focused on hoarding than on helping. When unencumbered balances sit above a full year of operating costs, the public has every right to demand a deeper, more transparent debate about who benefits from that money and what values the budget reflects.​​

City leaders should be willing to discuss options such as temporary tax rebates, targeted rate reductions, or accelerated investments in infrastructure and neighborhood priorities when balances remain above a year of operations for more than a short period. Those choices do not weaken fiscal responsibility; they make it visible and accountable by tying reserve levels to clear public goals instead of quiet accumulation. In Miami County’s cities, especially Troy, the data show that the community has already paid for a large cushion. What is needed now is an honest policy conversation about how much is enough—and when it is time to give taxpayers some of their money back.​​

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