Finances ‘in good shape’
CHINA GROVE — The Kannapolis City Council got an update on the city’s finances at its annual retreat Thursday morning at Pity’s Sake Lodge.
The purpose of the discussion was two-fold, said Finance Director Eric Davis. The first was to review the council’s actions to date and its successes. The second was to provide council — in particular its new members — with a sense of confidence in make decisions going forward.
The 10-year Financial Plan and Capital Improvement Program, Davis pointed out, is flexible and can accommodate the council’s priorities. It was adopted in Spring 2012 for the 2013 fiscal year.
That plan, Davis said, should not hinder city projects. “We wanted to give council confidence that things are achievable.”
Going forward, he said, the city can place greater emphasis on user fees, and place a greater utilization of cash for smaller projects — restricting debt to larger projects.
Council members, he said, have adopted financial priorities to guide decision-making.
The current Capital Improvement Plan, he said, has some 87 projects slated at a total cost of $124 million. Davis showed council projected budgets and revenues for the next three years.
“The thing that was consistent is that nothing was consistent,” he said.
The city is still trying to work its way back from devaluation in 2008, Davis said. “We’re not all the way back yet.”
Davis showed general fund increases of 4 percent in personnel and 4.75 percent in operations during the next three years. Revenues can be generated from property tax, water and sewer rates, stormwater fees and solid waste/recycling fees.
The property tax, Davis said, is forecasted for 2Ľ percent growth. “You should feel good about that number.”
Additionally, he cited a 97 percent tax collection rate.
Under successes, in addition to the policies adopted, Davis noted that the city’s fund balance increased from 10 to 17 percent. The goal is 25 to 33 percent, he said. “It doesn’t mean we’re hoarding money. We are being conservative and budgeting consistently.”
Also, the city’s bond rating by Standard & Poor’s has recently increased from A+ to AA-minus. In the mid-’90s, he said, that rating was BBB+.
“We felt this would happen,” Davis admitted. “This will be huge for us as interest rates increase. This will save us a ton of money.”
The S&P report cited the city for an adequate economy, strong management conditions, strong budgetary flexibility with available reserves, adequate overall budgetary performance and very strong liquidity.
Turning to the Capital Improvement Plan, Davis said that 31 projects were identified totaling $56.2 million. Of that number, 15 have been completed at a cost of $7.2 million; 14 are in-progress at a cost of $47.9 million; two have been delayed at a cost of $1.1 million; and none canceled.
The highlights of the plan include a new City Hall and Police Department headquarters; Veterans Park; Central Warehouse; Albemarle Interconnect; and Water Meter Replacement Project. These projects all total $49.2 million.
The plan is to receive minor updates annually and major revisions by council every other year as new councils set new priorities. The first major revision is now under way. Factors that determine priorities, Davis said, include improvements to health and safety, overall quality of life and enhancements to economic development opportunities.
There are several key drivers for the fiscal year 2015. Those include a debt issuance of $2.1 million for the City Hall construction, the maintenance of 16 firefighter positions at $775,000 a year (the money had previously been covered by a grant) and planned rate increases in property tax, stormwater fees and environmental fees. Additionally, the city will begin purchasing water from Albemarle at a cost of more than $600,000 annually.
“The city is financially secure for continued economic development initiatives,” he said. “We have come a long way and we are in good shape. We have flexibility.”
Freelance writer Susan Shinn lives in Salisbury.
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