This week, I announced that the City of Stamford has posted a general fund operating year end surplus for fiscal year 2008-2009 of $1.3 million. The 2008-09 operating surplus represents approximately .3% of the City’s general fund revenue for the year.
I am very pleased that the City has ended the year with a modest surplus, given the state of the economy and the severe downturn in the global financial markets during this period of time. At the start of the fiscal year, I directed all departments to give back up to three percent of their operating budgets to offset anticipated non-tax revenue losses, the most significant of which was in building permits and conveyance taxes. This proactive approach proved to be the appropriate strategy as the end result was a drop in revenues of approximately $3 million offset by a decrease in expenditures by $4.3 million, resulting in the $1.3 million operating surplus.
Every year, the City designates surplus funds for specific purposes. When these funds are not expended, they roll forward into the ensuing year as surplus. In 2008-2009, the City did not spend $3.2 million of that designated fund balance; therefore, that $3.2 million is available along with the $1.3 million year end surplus for a total of $4.5 million available for future designation.
The City Charter requires that by October 15 of each year I recommend the amount of the surplus to be placed into the City’s Rainy Day Fund. The Charter also requires that the draft annual audit be submitted to the Board of Finance by September 30 of each year. Under State law, the Board of Finance must finalize the audit prior to December 31. Because of its Charter requirement, Stamford is among the first communities in Connecticut each year to complete its audit.
In the draft audit, I recommended that the $4.5 million surplus be designated as follows: City Medical Reserve Fund: $1,000,000; Risk Management Fund: $1,000,000; Change in Fair Market Value of Investments: $327,400; and Rainy Day Fund: $2,174,017. This level of contribution to the Rainy Day Fund affirms our commitment to the Rating Agencies that the City will take measurable steps in building adequate reserves in line with other AAA rated communities.
If corporations reported their financials like the City of Stamford no company would ever report negative earnings.* The City had $8+ million in claims that it did not put through its P&L. The fact is the City had a loss of $7.7 million in 2009.
No where in Moody’s Rating Report does it talk about “surplus” as defined by the City in the Advocate’s letter.
The critical number is the General Fund Balance, which decreased by $7.1 million in 2009, from $15.5 million to $8.4 million. For the past three year according to Moody’s, and now for four years, the “city’s financial position has weakened.” At the end of 2008 the City’s General Fund Balance was 3.5% of General Fund Revenues, at the end of 2009 it is 1.5%
Capital Fund
The Mayor says he reduced expenses. Lets evaluate what occurred in the Capital Fund. Operating expenses increased 100% in 2009 from $8.4 million to $16.7 million. In the 2006-2008 period capital fund operating expenses increased 200+% – from $3.8 in 2006 million in 2006 to $ 8.4 million in 2008. In other words, Capital Fund operating expenses increased more than 400% since 2006.
The unanswered question is: How much in operating expenses has been shifted to the Capital Fund and funded with bond proceeds? No wonder our debt and taxes are at the breaking point.
Karen Murphy
* I assumed that the Advocate just prints the City’s Press Releases in these matters. To compound matters the Advocates does not allow the public to comment but gives the Mayor’s office a blog – go figure.
Comment by Karen Murphy — October 5th, 2009 @ 8:48 am
I would caution anyone from putting too much stock in a Moody’s rating (or any of the other rating agencies either).
I’m just curious about when the last time was that Stamford had a final (not draft) independent audit done?
Comment by Paul Steed — October 5th, 2009 @ 1:33 pm
Compared to NYS, NJ, and Caleefornya, we are in great shape!
Comment by Mike Young — October 6th, 2009 @ 10:18 pm
“Stamford Ends the Year with a Surplus.”
That’s one way to phrase it!
Another way to look at it would be to phrase it like this:
Stamford surplus shows that its’ citizens where “over-taxed”.
Comment by Joel Gonzalez — October 12th, 2009 @ 2:35 pm
I’ll start off by saying that I’m an Independent, I’m no fan of either party because in many ways both parties have failed the American people, however, in this case I hope that voters of Stamford will wake up because they continue to vote the same expecting to see different results which makes no sense. Dan Malloy has taxed Stamford to death and Martin, the new Democrat running will be pretty much the same. Wake up people! If you want to see some kind of change for the better then stop voting for the same party over and over! Look at the horrible conditions many of the roads are in, look at how taxes continue to go up and up even on things for the middle-class and the poor. This Independent plans to vote for Pavia because I’ve given Democrats so many chances and as far as I’m concerned they are full of empty promises.
Comment by Michael — October 15th, 2009 @ 3:08 pm