City Finances Remain Strong Despite Pandemic
November 17, 2021 at 3:51 a.m.
City Finances Remain Strong Despite Pandemic
By David [email protected]
Mayor Joe Thallemer asked Rowe to give a report to the Common Council Monday night now that Baker Tilly has finished the city’s comprehensive financial plan. Thallemer said the plan is a valuable tool that will help guide the city’s budget, capital spending and operating funds.
“The purpose of the plan is essentially to provide a financial roadmap for the city,” Rowe said. “Particularly, with what we’ve experienced over the last two years now, going back to 2020 with the pandemic, it becomes even more important to have a plan in place that maintains adequate reserves and also looks ahead at funding the needs and initiatives of the city.”
He said the roadmap expands the planning horizon beyond the next budget year and allows the city to be nimble and flexible as things change from year to year. It is intended to be a living document as things change annually.
Rowe reminded the Council of the challenges of 2020 when public safety was the highest priority. There were many unknowns, including what kind of impact the pandemic would have on the financial health of the city and the broader community, he said.
“Yet, I’m happy to share with you this evening, from a financial standpoint, the city remained resilient and really finished the year on a strong financial position despite all those challenges,” Rowe said.
The city finished with roughly $34.5 million of cash within the city’s major civil funds, he said. All the levy funds exceeded the minimum cash reserve balance, which is 15% of operating expenses.
“So that is a positive,” Rowe said. “The general fund had about $5.9 million of cash on hand, which equated to about 49% of annual operating expenses. So, again, a very healthy cash reserve balance.”
Rowe continued, “We did see that revenues compared to budget were about $1.8 million, it actually came in $1.8 million below budget. But again, with that said, cash reserves remain strong despite of that, and, again, the city was able to meet the minimum reserve thresholds.
“So, all in all, despite the pandemic, from a financial standpoint, it’s very safe to say the city remains strong coming out of it.”
In his presentation, Rowe presented the Council with a graph showing the net property tax and circuit breaker tax credits going back over the last 10 years.
In 2021, the net property tax revenues were $13,796,725, compared to 2012’s $9,972,219.
“So a good amount of increase over that 10-year period. So we have steady growth over property tax revenues in spite of the fact that circuit breaker losses continue to go up as well,” Rowe said.
The city’s 2021 circuit breaker losses totaled $788,611, compared to 2012’s $327,075. “That is revenue that the city loses that has to be made up somehow,” Rowe said. “So, again, with that tax revenue coming in and we look at the growth of the circuit breaker, which is roughly 38% of the total circuit breaker in the county, that can be a heavy lift. Again, the city continues to perform financially despite the circuit breaker losses growing over a number of years,” he said.
Another graph he presented compared the tax rates with the net assessed values. The tax rates are a product of the net assessed value and levy.
“Good news, the net assessed value continues to grow so the city is growing in terms of overall value, adding businesses, adding residential homes, what have you. As of 2021, you’re looking at about $1.1 billion. Looking back to 2012, the city was at $870 million. So about a 28% increase over that period of time,” Rowe said.
The tax rate in 2012 for the city only was $1.0778 per $100 of assessed valuation. That got up to as high as $1.2797 in 2019, but was down to $1.1822 in 2020 and $1.1967 in 2021. Rowe said from 2012 to 2021, the tax rate increased about 11%.
“So, the takeaways, the growth in the assessed value has helped to control or maintain that growth in the tax rate, so that’s what we’re seeing here,” Rowe said.
Another graph looked at the ending cash balances of selected operating funds of the city, including general, motor vehicle highway, local roads and streets, park and recreation, cemetery, aviation, MVH restricted and fire territory operating fund. In 2011, the ending cash balances for those funds were $10.95 million. That increased to $13.29 million in 2018, but dipped back down to $11.78 million in 2020.
“So, again, very strong cash position, particularly as we’re coming out of the pandemic here,” Rowe said.
Looking at trends in spending in those selected operating funds and over the last 10 years, he said there’s been an increase in spending of about 32%. Expenditures totaled $20.93 million in 2020, compared to $15.87 million in 2011; $17.01 million in 2012; and $14.90 million in 2013.
Rowe said, “So if you break that up into annual increases, it would be slightly above what sort of average inflation would be over the last 20 years.”
Rowe then compared Warsaw’s performance indicators to seven similar-sized communities in terms of population.
As for assessed value in 2020, Rowe said the city’s was above the average; but was below average with circuit breaker credits compared to the other seven communities. Warsaw’s property tax levy is the highest of the maximum, average and minimum; however, the tax rate is below the maximum and average.
“Again, it just goes to show that the growth in the assessed valuation and controlling the spending is keeping the tax rate within reasonable levels and below the average compared to those other communities,” Rowe said.
Looking at debt, Rowe said the city had $6.47 million in outstanding tax-supported debt, which is “pretty low” compared to the other communities. When it comes to debt per capita, as of Dec. 31, 2020, Rowe said the city is well below the average.
Finally, Rowe said the city continues to maintain a very healthy cash reserve balance of $37,393,000, which is above the average compared to the other seven communities.
For 2021 and beyond, Rowe some of the driving factors include ongoing impacts of COVID and capital projects. Some of the higher-dollar projects in the five-year capital improvement plan – that total $25.9 million and are cash funded – include $3.25 million for Mariners Drive, using Northern TIF funds; $1.475 million for Anchorage Road, using Northern TIF funds; $1.8 million, CR 300N phase 3, Northern TIF funds; $1.2 million, CR 200W project, Northern TIF funds; $1 million, Owen’s redevelopment, redevelopment allocation funds; and $1.2 million for the Southern Residential lift station, using Southern Residential TIF funds.
Rowe noted two other notable projects in the plan that are assumed to be bond funded, totaling $13.2 million. The first is the Center Lake Pavilion and park offices remodel totaling $3.2 million, funded by future bonds and cash on hand; the second is a new public works facility for about $10 million, funded by future bonds.
He ended his presentation with nine proposed action plan alternatives. Those included for the city to consider temporarily shifting property tax levey from other healthier funds to parks; undertake a review of all city fees; consider using a larger portion of EDIT or CCD funds to pay for capital projects; use additional TIF #2 funds to complete a portion of the capital plan; continue to pursue grants; issuance of general obligation and/or lease rental bonds to fund capital projects; monitor budgeted disbursements in operating funds; actively pursue funding opportunities on outstanding bonds; and reduce or delay portions of the city’s capital plan.
Mayor Joe Thallemer asked Rowe to give a report to the Common Council Monday night now that Baker Tilly has finished the city’s comprehensive financial plan. Thallemer said the plan is a valuable tool that will help guide the city’s budget, capital spending and operating funds.
“The purpose of the plan is essentially to provide a financial roadmap for the city,” Rowe said. “Particularly, with what we’ve experienced over the last two years now, going back to 2020 with the pandemic, it becomes even more important to have a plan in place that maintains adequate reserves and also looks ahead at funding the needs and initiatives of the city.”
He said the roadmap expands the planning horizon beyond the next budget year and allows the city to be nimble and flexible as things change from year to year. It is intended to be a living document as things change annually.
Rowe reminded the Council of the challenges of 2020 when public safety was the highest priority. There were many unknowns, including what kind of impact the pandemic would have on the financial health of the city and the broader community, he said.
“Yet, I’m happy to share with you this evening, from a financial standpoint, the city remained resilient and really finished the year on a strong financial position despite all those challenges,” Rowe said.
The city finished with roughly $34.5 million of cash within the city’s major civil funds, he said. All the levy funds exceeded the minimum cash reserve balance, which is 15% of operating expenses.
“So that is a positive,” Rowe said. “The general fund had about $5.9 million of cash on hand, which equated to about 49% of annual operating expenses. So, again, a very healthy cash reserve balance.”
Rowe continued, “We did see that revenues compared to budget were about $1.8 million, it actually came in $1.8 million below budget. But again, with that said, cash reserves remain strong despite of that, and, again, the city was able to meet the minimum reserve thresholds.
“So, all in all, despite the pandemic, from a financial standpoint, it’s very safe to say the city remains strong coming out of it.”
In his presentation, Rowe presented the Council with a graph showing the net property tax and circuit breaker tax credits going back over the last 10 years.
In 2021, the net property tax revenues were $13,796,725, compared to 2012’s $9,972,219.
“So a good amount of increase over that 10-year period. So we have steady growth over property tax revenues in spite of the fact that circuit breaker losses continue to go up as well,” Rowe said.
The city’s 2021 circuit breaker losses totaled $788,611, compared to 2012’s $327,075. “That is revenue that the city loses that has to be made up somehow,” Rowe said. “So, again, with that tax revenue coming in and we look at the growth of the circuit breaker, which is roughly 38% of the total circuit breaker in the county, that can be a heavy lift. Again, the city continues to perform financially despite the circuit breaker losses growing over a number of years,” he said.
Another graph he presented compared the tax rates with the net assessed values. The tax rates are a product of the net assessed value and levy.
“Good news, the net assessed value continues to grow so the city is growing in terms of overall value, adding businesses, adding residential homes, what have you. As of 2021, you’re looking at about $1.1 billion. Looking back to 2012, the city was at $870 million. So about a 28% increase over that period of time,” Rowe said.
The tax rate in 2012 for the city only was $1.0778 per $100 of assessed valuation. That got up to as high as $1.2797 in 2019, but was down to $1.1822 in 2020 and $1.1967 in 2021. Rowe said from 2012 to 2021, the tax rate increased about 11%.
“So, the takeaways, the growth in the assessed value has helped to control or maintain that growth in the tax rate, so that’s what we’re seeing here,” Rowe said.
Another graph looked at the ending cash balances of selected operating funds of the city, including general, motor vehicle highway, local roads and streets, park and recreation, cemetery, aviation, MVH restricted and fire territory operating fund. In 2011, the ending cash balances for those funds were $10.95 million. That increased to $13.29 million in 2018, but dipped back down to $11.78 million in 2020.
“So, again, very strong cash position, particularly as we’re coming out of the pandemic here,” Rowe said.
Looking at trends in spending in those selected operating funds and over the last 10 years, he said there’s been an increase in spending of about 32%. Expenditures totaled $20.93 million in 2020, compared to $15.87 million in 2011; $17.01 million in 2012; and $14.90 million in 2013.
Rowe said, “So if you break that up into annual increases, it would be slightly above what sort of average inflation would be over the last 20 years.”
Rowe then compared Warsaw’s performance indicators to seven similar-sized communities in terms of population.
As for assessed value in 2020, Rowe said the city’s was above the average; but was below average with circuit breaker credits compared to the other seven communities. Warsaw’s property tax levy is the highest of the maximum, average and minimum; however, the tax rate is below the maximum and average.
“Again, it just goes to show that the growth in the assessed valuation and controlling the spending is keeping the tax rate within reasonable levels and below the average compared to those other communities,” Rowe said.
Looking at debt, Rowe said the city had $6.47 million in outstanding tax-supported debt, which is “pretty low” compared to the other communities. When it comes to debt per capita, as of Dec. 31, 2020, Rowe said the city is well below the average.
Finally, Rowe said the city continues to maintain a very healthy cash reserve balance of $37,393,000, which is above the average compared to the other seven communities.
For 2021 and beyond, Rowe some of the driving factors include ongoing impacts of COVID and capital projects. Some of the higher-dollar projects in the five-year capital improvement plan – that total $25.9 million and are cash funded – include $3.25 million for Mariners Drive, using Northern TIF funds; $1.475 million for Anchorage Road, using Northern TIF funds; $1.8 million, CR 300N phase 3, Northern TIF funds; $1.2 million, CR 200W project, Northern TIF funds; $1 million, Owen’s redevelopment, redevelopment allocation funds; and $1.2 million for the Southern Residential lift station, using Southern Residential TIF funds.
Rowe noted two other notable projects in the plan that are assumed to be bond funded, totaling $13.2 million. The first is the Center Lake Pavilion and park offices remodel totaling $3.2 million, funded by future bonds and cash on hand; the second is a new public works facility for about $10 million, funded by future bonds.
He ended his presentation with nine proposed action plan alternatives. Those included for the city to consider temporarily shifting property tax levey from other healthier funds to parks; undertake a review of all city fees; consider using a larger portion of EDIT or CCD funds to pay for capital projects; use additional TIF #2 funds to complete a portion of the capital plan; continue to pursue grants; issuance of general obligation and/or lease rental bonds to fund capital projects; monitor budgeted disbursements in operating funds; actively pursue funding opportunities on outstanding bonds; and reduce or delay portions of the city’s capital plan.
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