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City of Madison: Financial health holding steady

Rick Patrick: Greene Publishing, Inc.

According to a recent financial report by Powell & Jones, Certified Public Accountants for the City of Madison, for the fiscal year that ended Sept. 30, 2016, the City's financial health is holding steady. The City continues to face financial challenges in providing needed services such as fire and police protection.

Highlights of the report showed that “assets of the City exceeded its liabilities at the close of the most recent fiscal year by $10,395,418. Of this amount, $751,308 may be used to meet the government's ongoing obligations to citizens and creditors. The City's net position decreased by $288,279 during the fiscal year. As of Sept. 30, 2016, the City's reported combined ending unassigned fund balance of $218,116. During fiscal year 2016, the City's total debt increased by $152,542, primarily as a result of the increase in the net pension liability.”

According to Richard Powell, with Powell & Jones, the City is funded with two revenue sources. The first source is with property (or ad valorem) taxes. The state legislature sets a limit on the amount cities can levy in terms of ad valorem taxes. Currently that limit is 10 mils. (One “mil” is equivalent to one dollar of tax per $1,000 assessed value of a piece of property.) Currently, the millage rate for the City of Madison is seven mils. If the City decided to raise the millage rate to the maximum of 10 mils; this would bring in approximately $250,000 in additional revenues. In addition to tax revenues, the City does aggressively seek various Federal and State grants. These grants do help fund specific projects, but it is usually very restrictive on how these funds may be utilized.

The other primary source of funding for the City comes from user fees from water, sewage, garbage, sanitation, etc. Total revenues from “governmental activities” were $2,330,952. Total revenues from “business-type activities” were $4,017,378. Governmental activities expenses totaled $3,716,798. Total expenses in the business-type activities were $2,919,811. A transfer from business activities to the government activities ledger of $1,121,892 helped to balance the sheet. The financial report shows that the City is dependent on these business-type activities to fund the City's services, especially public safety services, such as police and fire, which cost the City approximately 1.8 million dollars yearly.

One item that hits the City's budget every year is the pension obligation for the fire and police employees. With 10 full-time firefighters, the City's obligation to the firefighter's pension fund is $142,000. With 15 full-time police officers on the City's payroll, the pension obligation is $85,000 per year. Higher turnover within the police department helps keep the City's pension obligation lower. Bennett is quick to point out that, given the City's relatively high crime rate, investment into public safety is a necessary expense.

Another significant drain on the City's finances is the “super fund” clean-up site on Rocky Ford Road. According to Madison City Manager Tim Bennett, contaminants were improperly put in the ground at the old ITT site several years ago. Because of this the City pays approximately $150,000 per year for continuous clean up of the site. “It's like pouring money down a deep, dark hole,” said Bennett.

The City was able to keep a fund balance of $218,116 at the end of the fiscal year. This is well short of the ideal goal. Ideally the fund balance should be able to fund four months of total expenditures. For the City of Madison, that would equal approximately $1,100,000. Powell pointed out that this was not due to poor fiscal management, but because the City has chosen to provide the level of public safety service it has.

With funds likely to be tight for the foreseeable future (especially if the voters across the state vote in 2018 to exempt another $25,000 worth of property tax on properties valued at over $100,000), Bennett says the City will continue to strive to keep costs low. “Many of our employees already are multi-tasking, wearing several hats. Although sometimes challenging, this helps us stretch tax dollars,” said Bennett.

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