Saturday, September 27, 2014

Fragile Fiscal Health - A Challenge for Every City

The National League of Cities produced a list this year of ten critical issues facing American cities. Number one on the list for cities is probably the same as number one on your own household list: financial health. The National League of Cities believes that the number one challenge facing communities is their fragile fiscal condition.

Fiscal condition is paramount on my mind lately because the auditors have arrived. The conference room next to my office is piled high with boxes of financial records. Files are spread out across tables. Nearly every seat is occupied by a well-dressed highly trained accountant types busily going through the city’s financial records. The only sound that comes from them is the occasional shuffle of paper, the gentle whirr of laptop computers, and the soft taps of keystrokes.

Each year, the city brings in an outside accounting firm, lays all of our records out on the table and these independent auditors go through everything with a fine tooth comb. Their job is to review your city’s financial health, and make an independent report to City Council regarding our fiscal health. After they assault our records, they produce a report that outlines how your money was used to manage your city, and they look at a variety of other statics too to produce a report that really is a true picture of the city’s financial health. These reports, known as Comprehensive Annual Financial Reports, which meet high standards set by the Government Finance Officer’s Association in regards to providing a clear and accurate picture of the community’s finances area eligible for an annual award from the GFOA.

While the record shows that we do a pretty good job of pinching every penny and meeting every requirement that the Government Accounting Standards Board expects us to meet, the record also shows that we operate on a razor’s edge when it comes to revenue and expenditures. We meet the National League of Cities definition of fragile fiscal health

What makes me say we have a fiscal health concern? Let’s look at a few facts. First, our budget growth is not keeping up with inflation. The cost of goods and services that you city needs to provide the level of service that we believe you expect are growing, and the dollars available to buy those goods and services are not growing at the same rate. Secondly, there just are not as many employees to do the work that there used to be. Your city workforce once exceeded 140 but now is just 100 employees. The workload has not decreased, and while I think our employees have done a good job keeping service delivery at a high rate, you can see that we are having to cut a few corners to keep up.

By no means am I trying to paint a bleak picture for our community or the future. Things are getting better in our community each and every day, and more good news is on the way for us as our region grows and develops. As a city, we are investing in technology to allow us to provide better service delivery with fewer resources. We are also making financial adjustments to reduce operating expenditures. Several hundred thousand dollars in expenditures have been saved by adjusting our employee benefit programs, evaluating and adjusting existing service contracts, and refinancing debt. Our reserve funds have grown steadily over the past three years and will continue to grow thanks to sound financial policies put in place by your Mayor and City Council. We look for ways to save you money every day, and we will continue to do so.

We’ve never been a city government with piles of cash. Although our offices are in a building that in its previous life was bank; the vault in the basement holds files, not funds. We have no desire to be a government that has piles of cash in the bank because its just not good policy for us to charge citizens cash that we don’t need and then sit on it. I’ve said before publicly, and I believe it whole heartedly, that your city government needs to keep working to find ways to keep your money in your pocket because every dollar you pay us in taxes or utility payments is a dollar that you can’t spend on things you need and it is a dollar you can’t spend in a local business to support our local economy.

And although you may not believe it when you have to pay your tax bill, or your utility bill, our auditors and the national Government Finance Officers’ Association will tell you we are pretty good at managing your money wisely and transparently. You don’t have to take my word for it - the twenty five Government Finance Officers Association Awards for Excellence in Financial Reporting that line the wall of the Municipal Center speak for themselves.