January 19, 2012
City finishes year on solid financial footing
About $250K in additional sales tax revenue contributes to $550K in additional fund balance
Last year was an “optimistic year” for city finances as Cortland received $263,000 more in revenue than expected and added $550,000 to its general fund balance, said Mack Cook, the city’s director of administration and finance.
The city is preparing its year-end numbers from the 2011 budget and the preliminary data look good, Cook said.
Cook said the general fund balance will be around $2.3 million in 2012, or about 13 percent of the total budget. He said the goal is to get the fund balance between 15 and 17 percent of the total budget.
Having a larger fund balance means lower bond ratings and interest rates on loans, Cook said.
“If we continue in this environment we can reach our goal in three or four years,” he said.
Cook credited the Common Council and city department heads and staff for reducing spending across the board. In total, the city departments came in $672,404 under budget in 2011, with the largest savings coming from the police and fire departments.
Cook said having a larger fund balance would also help the council as it makes plans to replace equipment or repair roads.
He said it will also give the city flexibility in areas of the budget that can be hard to control, like snow plowing, overtime and fuel costs.
While things look good now, a few financial hurdles remain, Cook said. He cited rising health care and fuel costs, unpredictable sales tax revenue and the cost of making infrastructure repairs as examples.
Nearly all of the $263,000 in extra revenue in 2011 came from sales tax, though Cook did not have year-end figures for the city’s sales tax. The total projected 2011 revenue for the city is $17.7 million.
The good financial news comes a year after the state Comptroller’s Office ripped the city for the handling of its finances.
In 2009, the city had a $150,000 deficit in its fund balance, but has seen a reversal of fortune in recent years.
In 2010, sales tax revenue came in $343,000 over the budgeted amount and the city collected 97.2 percent of the total tax levy, one of the highest amounts ever.
The city also benefited from the sale of Northwoods Rehabilitation and Extended Care Facility, which helped city finances that year.
Kellogg Road LLC purchased the facility for about $6.5 million.
The new owner paid the full amount owed in back taxes, about $1 million, on Sept. 10, 2010.
In September, the credit-rating agency Standard and Poor’s upgraded the city’s bond rating from BBB to BBB +. The BBB rating indicates the city has “adequate capacity to meet financial commitments.”
Cook hopes the city can see its rating improve in the near future.
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