Alton Craft stood on the steps of Oxford’s multi-million dollar performing arts center recently and told a story about the city’s money.

Craft, the city’s finance director, said that in 1991 he and Mayor Leon Smith found themselves seated at a table inside the austere New York City office of Moody’s, a financial ratings firm. The Wall Street financiers asked Smith just how much money he thought the residents of Oxford would let the city keep in reserve.

Smith didn’t hesitate, Craft said, and told the men “$100 million.”

“I told the mayor, you just over-punted your coverage,” Craft said, speaking by phone Thursday.

At the end of fiscal year 2013 Oxford had $72.2 million in unreserved money in its general fund. That’s money Oxford can do with largely as it wishes. Craft thinks the city will hit the $100 million mark within the next five years.

It’s a staggering figure, to be sure, and it means Oxford can weather financial storms that threaten to sink other cities.

To put Oxford’s savings into perspective, Hoover had $30.4 million in unassigned money in its general fund at the end of fiscal year 2013. That’s about $356 for each of the city’s approximately 85,000 residents that year.

Oxford, in comparison, could have given each of the city’s residents $3,391 last year out of its savings.

Anniston’s unreserved general fund balance at the end of fiscal year 2012 was $9.9 million.

“It’s a large number,” said Randy Taylor, Huntsville’s finance director.

Taylor said it would be difficult for him to compare Oxford’s savings to other municipalities without knowing the intimate details of Oxford’s finances, but he said it’s good to keep a reserve for when times become tough.

Still, there is a balance to be struck when it comes to spending money on residents and saving for emergencies, Taylor said.

“We want the money to be at work,” Taylor said. “But there’s also the need to protect government from things. The recession has informed us of that fact.”

Before the Great Recession began in 2008, Taylor said, Huntsville had about $25 million in reserve, and residents would often ask why the city wasn’t spending that money in ways that benefited them.

The city’s answer? “We were holding it for emergencies,” Taylor said.

Since the recession, however, Taylor said, “We don’t get that question anymore.”

The savings mean Oxford was able to more easily handle the $2 million in construction delay fees and fines the city amassed after discovery of ancient human remains at the site of the planned recreation complex, Craft explained.

The cash in the bank means the project can “keep pushing forward” Craft said.

Melinda Lopez, president of the Government Finance Officers Association of Alabama, said it’s important for cities to have a policy on how much cash to keep in reserve.

The association recommends that municipalities “regardless of size, maintain unrestricted fund balance in their general fund of no less than two months of regular general fund operating revenues.” Oxford’s $72 million in savings is more than 23 times that figure.

Keeping cash in reserve is good for a city's bond rating, Taylor said.

Oxford’s AA2 rating by Moody’s means the city pays less for the money it borrows, Craft said.

Borrowing money, in the form of bond issuances, is how Oxford paid for much of its infrastructure projects for decades, but not recently.

Before the recession, which began in 2008, Oxford’s second highest source of income was interest on the cash it had in the bank, Craft said.

“We were making 5,6,7 percent interest,” he said. “Sales taxes brought in about $22 million a year, and income from interest was between $3 and $5 million.”

After the recession, however, interest income dropped, and it made more sense to pay for new city projects with cash, Craft said. The city used its healthy savings to pay $20.5 million for the city’s performing arts center, and renovations of its civic center and lake.

It was good to have the free money from interest income, but when that began to dry up, it was time to dip into Oxford’s piggy bank, Craft explained.

“If you don’t have the money, you can’t do anything,” Craft said.

Staff writer Eddie Burkhalter: 256-235-3563. On Twitter @Burkhalter_Star.