Calgary's chief financial officer says the city is using its reserve funds prudently and is keeping more debt at bay.

A report shows the city had nearly $2 billion in its various reserve funds at the end of last year, CFO Eric Sawyer told council Tuesday.

Most of that money is ear-marked for specific purposes, but the city's general reserve fund has more than half a billion dollars set aside for emergencies.

Sawyer says capital reserve funds are set aside by the city for specific projects, a system that allows it to avoid taking on debt.

"That's kind of the complete ... opposite of build something now, incur debt and pay off the debt," he said. "The reserves allow you to accumulate dollars, then spend it and not take on associated debt."

Mayor Naheed Nenshi said it's good financial management.

"We are sitting at a place that is somewhere between healthy and very strong, according to the bond rating agencies, and to me that is really a sign of fiscal prudence and gives us the flexibility to do things in bad times, like freeze taxes like we did this year," he said.

Coun. Ward Sutherland said it's a bit deceptive to say the city's rainy day fund has over half a billion dollars in it.

He said council has approved numerous projects for the next couple of years, and those decisions have taken significant sums out of that account.

Sutherland asked the city to give council members monthly updates on the rainy day fund, so they always have accurate numbers on what's available.