SHADY SHORES — An independent auditor told the council Monday night that the town still has a healthy fund balance, even after paying cash for the construction of the new Shady Shores Town Hall. But at least one member of the Town Council questioned why town leaders continued to squirrel so much away.

Polly Carter reminded fellow council members that they had passed an ordinance requiring several different emergency funds, including $100,000 for fire services, $100,000 for road or bridge failures, and six months’ worth of cash in the fund balance.

The Sept. 30 audit of town finances showed the town had $418,331 in its unrestricted fund balance, or about five months’ worth of spending at current levels. But Shady Shores still had another $419,562 remaining for capital projects.

“What are we holding it for? What are these things we might need?” Carter asked the mayor and the rest of the council. “Nobody has to answer the question, just think about it.”

Several members, including Mayor Olive Stephens, did try to answer the question, saying that past problems and the uncertain future reinforced a need to be frugal.

“With the foreclosure rate being what it is, we may not always have this money coming in,” council member Charles Grimes said.

Auditor Jerry Eastup told the council that Shady Shores collected all but about $16,000 of the $600,000 it was owed in property taxes last year, underscoring that the tax collection rate was good.

His firm, Hankins, Eastup, Deaton, Tonn & Seay gave the town’s finances an unqualified opinion, its highest mark. In addition, its analysis of the town’s management showed good internal controls, he said.

Shady Shores has no long-term debt in its $2.44 million worth of assets, which include the new Town Hall, roads and other government property. In addition, the town has its cash in municipal investment pools.

“These are backed by the state, so there’s no exposure there,” Eastup said.

Shady Shores’ strong cash position comes in part from budgeting $462,000 of the town’s fund balance to finish paying for the new Town Hall — but the town spent down only about $107,000, “so that’s very good,” Eastup said.

Carter pressed the council at the end of its regular meeting Monday night, saying that members had already determined what the different emergency balances should be one year ago. None of that policy included keeping money in a capital projects account, she said, and not approaching the half-million dollar mark.

“How did that change?” Carter asked the council. “Do we really need this much that we’re holding?”

Shady Shores began assessing property taxes in 1999, according to Denton County Tax Assessor-Collector Steve Mossman. The town initially charged 34 cents per $100 valuation, but lowered the rate in 2005. Officials lowered the rate again in 2007 and in 2008. The 2008 tax rate is 31.397 cents per $100 valuation.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com .