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untanglingwebs
El Supremo
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FLINT -- The City of Flint says their finances have improved, saying the deficit is down and the cash flow is up.
The City of Flint Finance Department says the Fiscal Year 2011 end-of-year close and combined operating deficit is calculated at $7.34 Million (unaudited). Flint says this is down from the projected $14.63 Million when the budget was adopted in June 2011.
"It shows that our savings, our personnel reductions, what we are doing here at the city, the savings are starting to add up and you can see it on the books," said Mayor Walling on Friday.
The city also predicts the cash flow balance to be above $10 Million through September 2012.
In a release, Finance Director Michael Townsend stated, “Spending has been reduced when recent months are compared with 2010 and other years. Additional revenues from income taxes and state-shared revenues are also positive. This adds up to a stronger cash flow for the City of Flint.”
While the financial outlook appears to be improving, the city does say they are still faced with “restructuring golf, janitorial and sanitation services, contract concessions from public safety unions, and departmental reforms for efficiency.”
You can read the Fiscal Year 2011 financial report by clicking here.
What do you think has helped most to reducing the deficit? Leave us your comments below. |
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Sun Nov 06, 2011 1:30 pm |
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untanglingwebs
El Supremo
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This new revelation, just days before the election, disputes the MSU case study coordinated with the City of Flint Finance Departmrnt and reported in the Flint Journal on October 4th.
Page 14 of the study :"Despite significant staff reductions, the resulting decrease in personnel does not equate to an equivalent decrease in personnel expenditures. In fact, the dollar amount of wages and benefits have continued to increase....this was a decrease of 460 employees or 37.5%. During that same time period, total wages and benefits went from $79.6 million to $93.2 million for an increase of $13.6 million or 17.1%. If retiree healthcare were excluded, the increase based on what is considered active employee wages and benefits would be 10.2%. A significant portion of active employee expenditures is related to pension and healthcare costs."
Page 19 of the study.
"As demonstrated earlier, savings from reductions in workforce may be offset by inflationary increases in fringe benefits. This is accelerated when reductions in workforce are achieved through retirements. From a personnel standpoint, retirements are a preferred approach because it is a softer landing for all involved. The reality, however, is that required funding levels for pension and OPEB costs are shifted from funding benefits for active employees to funding benefits for retirees.
There is also a budget impact, albeit shorter term, when layoffs occur. Unemployment compensation is consuming a larger portion of municipal budgets. The unemployment payments for the City have exceeded $1 million for each of the last two years....That represents an &800,000 increase in expenditures over the previous year."
Page 11
"As of June 30, 2011, The City of Flint's General Fund ended the year with an accumulated deficit of $14.6 million."
remember this report was generated in conjunction with the City of Flint Finance Department. |
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Sun Nov 06, 2011 1:56 pm |
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untanglingwebs
El Supremo
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Flint budget deficit lower - Good news or 'politically suspect'?
By Steve Carmody
(photo by Steve Carmody/Michigan Radio)
Flint mayor Dayne Walling said the city’s budget deficit has been cut in half. Walling’s opponent in next week’s election said he doesn’t believe the mayor.
Mayor Dayne Walling said a just completed review shows Flint finished its last fiscal year $7.34 million in the red. But that’s about half of what was expected ($14.62 million). Walling said it’s a sign budget reforms he’s put in place over the past two years are working.
"With any changes it takes time to be able to be calculated and assured," said Walling.
The new Flint budget numbers are ‘unaudited’ and that’s important to Walling’s opponent in next week’s mayoral election. Darryl Buchanan said the numbers can’t be trusted.
“His numbers are suspect to me and political," said Buchanan, " And I think we have a major problem.”
Flint officials said the latest budget numbers will be available to the state team reviewing the city’s finances. The state team is trying to determine if the governor should appoint an emergency manager to run Flint.
The eight-member panel appointed by the governor in September was supposed to delivery its recommendations to the governor by the end of October. However, the panel requested and the governor approved an extension of up to 30 days.
Flint was the subject of a state government takeover in 2002.
Many people in Flint complain that previous state takeover did little to solve the city's financial problems. |
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Sun Nov 06, 2011 1:59 pm |
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untanglingwebs
El Supremo
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City of Flint's annual audit shows nearly $17 million deficit
Published: Wednesday, January 05, 2011, 9:01 PM Updated: Thursday, January 06, 2011, 10:55 AM
By Kristin Longley | Flint Journal
Follow
FLINT, Michigan — The city of Flint's annual audit showed the city ended the 2010 fiscal year with a nearly $17 million deficit.
The finding was revealed tonight at the audit presentation given to Flint City Council members.
The audit showed the city is spending less than it has in previous years, but it's also taking in less revenue because of decreased property taxes, state aid, income taxes and fees.
The city spent $64.74 million out of its general operating fund in the 2010 fiscal year that ended June 30, but it only took in $60.23 million.
That shortfall — along with smaller deficits in the parks and recreation fund, building fund and garbage fund — combined with last year's $10.1 million deficit to add up to the nearly $17 million deficit, officials said.
The city now will have to amend the deficit reduction plan it submitted to the state last year to show how it will overcome the new deficit.
Flint Mayor Dayne Walling says he wants to ask the state for permission to borrow up to $20 million to pay off the deficits. That proposal would first have to be approved by the Flint City Council.
Councilman Delrico Loyd said he was disappointed in the audit's findings.
"It was not good news," he said. "We need to manage our resources better to spend within our revenues. We need to be serious about finding new revenue streams."
City council members were particularly concerned about the city's cash on hand, which funds employee payroll and vendor obligations. The "pooled cash" fund has decreased by about $20 million every year since 2007, auditors said.
As of Friday, the city had about $7 million in pooled cash, Finance Director Michael Townsend said.
Townsend said the city is closely monitoring the pooled cash fund. He said the city is in line to meet its payment obligations in January and February.
"After that, without some action taken... it will be difficult for us to make payroll," he said.
If the city doesn't meet its payroll obligations, the state would have to conduct a review of the city's finances, according to state law. That's the first of many steps that could eventually lead to a state takeover of the city's finances.
Townsend said the city is looking at making a number of budget cuts as well as exploring revenue-generating proposals to avoid that scenario. |
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Sun Nov 06, 2011 2:04 pm |
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untanglingwebs
El Supremo
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CASE STUDY: City of Flint, Michigan1 Oct 2011 ... paper uses the case of Flint, Michigan to explore what is meant by chronic fiscal stress, identify ... on curing years of accumulated deficits by issuing additional debt and provides ...... acquire property subject to tax foreclosure. ...http://expeng.anr.msu.edu/uploads/files/42/MSUE_FlintCaseStudy-2011%202.pdf - - Cached - Similar pages
This case study by Michigan State university was designed to define "chronic fiscal stress, identify it's symptoms, and to propose some solutions to address long-term solvency" (Executive Summary).
The City had a 18% population loss in the ten years from 2000 to 2010. This depopulation is not only reflective of the changes and losses in industry, but also demonstrates the decentralization of the large urban areas within the metropolitan statistical area. Flint's population declined significantly while the population of Genesee County remained stable for the most part. In 1960 the City of Flint constituted over 60% of the county and that representation has declined to 24.1% in 2010.
Housing abandonment willcontinue to contribute to"long term structural budget issues". Flint had a housing vacancy rate of 8.2% in 19910, but recent census figures show that figure has increased to 21.1% in 2010. That means one in every five homes in Flint are vacant.
Walling said in the debate at saint Andrews that a Cities of Promise survey stated there was a need for 500 new homes in the downtown area. many homes are for sale and/or vacant in the college-cultural area, Bradley Hills and Mott Park. The NSP2 money was originall for th purpose of stabilizing neighborhoods in change due to foreclosures and blight. Flint is using it to build 83 new homes.
The MSU case study discusses a 2006 study of housing abandonment in Flint and identified it as a that has a demonstrable impact on mubnicipal budgets, a problem common among the older industrial (rustbelt) US communities. Vacant properties create a loss in revenue and lowers property values. ( Ellen Basset, John Schweitzer, and Sarah Panken. Understanding Housing Abandonment and Owner Decision-Making in Flint, Michigan ; An Expolratory Analysis, 2006 http://lincolninst.edu/pubs/1145)
Property values are associated with home ownership. In 1960 the occupied housing units were 73.1% owner occupied housing. That percentage has declined to 44.&% in 2010 according to census figures.
Flint's jobless rate in the 2010 reporting period was 23.2% while the countywide rate was 10.8%. The median income for the City of Flint in the 2010 census was $28,385, which was 31.7% less than the Genesee County median household income of $41,586.
Decades of high rates of poverty are described in this article as a determinant of long term fiscal stress. The us Census often uses the American Community Survey as a means of estimating certain data . Their estimaate of the level of poverty for Flint was 34.9% in 2009, an increase from the 1990 level of 30.6%.
Cities that are unable to maintain a positive fund balance is said to be "symptomatic of structural budgetary constraints" and is one of the baseline deerminants of chronic fiscal stress.
After the recall of Woodrow Stanley, Flint had a $26.6 million dollar deficit and an Emergency Financial Manager was appointed from May 2002 to January 2006. By June30, 2005 the budget had been restored to a $6.1 surplus. The articles identified costly litigation, subsequent labor settlements, and declining revenues as reasons for a return to deficits. In June of 2008 the city had a closing deficit of $6,8 million. page 10 shows a general fund deficit of $10.1 million in 2009 and a $14,6 million deficit in 2010. (Williamson left office after the first part of fiscal year 2009-2010).
Note: council amended the Mayor's 2006 proposed budget and wanted to spend most of the surpus. Costly litigation ensued and Council attempted to move the federal HUD funding to the County.
In 2011, the City projected it would run out of cash by march 2, 2011 and requested a $20 million 25 year stabilization bond, but only received authorization for 48 million The city anticipates requestin an additional 412 million to eliminate accumulated operating fund deficits.
The primary revenue sources of revenue are property taxes (17% of the General Fund), income tax (24%) and stae shared revenue (31%). Changes in tax law , economic declines which lowered property values, and tax appeal settlements created a 24 % decrease in the property tax revenue over the last five years.
Flint is fifth among Michigan's ten largest cities in non-homestead tax rates, another sympton of a city in chronic fiscal stress. The level of taxation is an important consideration in attracting and retaining property owners and also in recruiting and retaining businesses. This study demonstrates the diadvantage to residents by the high homestead tax rate. An average Flint homeowner pays on average 28% more than the county residents in the nine other largest communities in Genesee County.
The loss of employment has resulted in a loss of income tax revenue over the last five years of 31%. Flint would like to raise the income tax rate, but this could result in a loss of both resident and business to neighboring communities as there may not be value in increased taxes for the srvices received.
State revenue sharing that is constitutional is based on population and statuatory funding is based on a formula. Because the State has its own financial and budgetary issue, they have not fully funded the statuatory portion for over a decade. Population losses and lessened statuatory funding has resulted in a loss of state revenue sharing of 13% over the last five years.
walling touts his cut in staff, but that did not accomplish an "equivalent decrease in personnel expenditures. The expense of wages and benefits have continue to increase am
nd according to this study increased by $13,6 million or 17.1% from the beginning of fiscal year 2003 to the end of fiscal year 2010.
Also "unemployment compensation is consuming a larger portion of municipal budgets. THE UNEMPLOYMENT PAAYMENTS FOR THE CITY HAVE EXCEEDED $1 MILLION FOR EACH OF THE LAST TWO YEARS...." WHICH IS AN INCREASE OF $800,000 OVER THE PREVIOUS YEAR.
Last edited by untanglingwebs on Sun Nov 06, 2011 12:49 pm; edited 2 times in total
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Fri Nov 04, 2011 7:17 pm
untanglingwebs
F L I N T O I D
While the city has a selfinsurance fund, it also has a insutance policy that covers certain general tort liability. Because of all the lawsuits and settlements, the balance of the self-insurance fund as of June 30,2010 was zero.The insurance policy has a claim limit of $1 million with a $500,000 deductible per occurance and an annual $3 million dollar total.
Some outstanding settlements include a $625,000 police shooting incident, an $800,000 injury settlement for a man who walked into a protruding guardrail, and a $125,000 whistleblower lawsuit. There were also reverse discrimination lawsuits and the Gnesee Towers lawsuit that started in 2000.
There are three special revenue funds that are in a deficit position as of June 30,2010, the end of the lfiscal year. They were the building department ($576,000), parks and recreation ($163,000) and garbage collection ($909,000) Decreased property tax revenues impact the millage collections that pay for Parks and Recreation as well as garbage collection.
The water. sewer and golf course funds are all cosidered to be enterprise funds and they all had operating losses in the last fiscal year. Decreases in net assets were $8.4 million for the water; $16.3 million for the sewer; and $950,000 for the golf courses. This golf course loss occurred with two courses closed. The losses to the sewer fund left it with no cash at the end of the fiscal year. The golf course had $2,500 left remaining and the water fund had the equivalent of three months operating funds. |
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Sun Nov 06, 2011 2:18 pm |
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untanglingwebs
El Supremo
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RESOLUTION TO ADOPT DEFICIT ELIMINATION PLAN FOR FY 2010 AND FY 2011
BY THE MAYOR:
WHEREAS, The City Council has determined, based on the Comprehensive Annual Financial
Report, that the City of Flint had an accumulated audited operating deficit of $16,552,871 at the
end of its last fiscal year ended June 30, 2010 and a projected operating deficit of $3,334,129 at
the end of its current fiscal year ending June 30, 2011. This determination of the accumulated
operating deficit has been made in accordance with generally accepted accounting principles; and
WHEREAS, On January 10, 2011, City Council adopted Resolution No. 110051 authorizing the
administration to make application to the Secretary of the State Administrative Board for an
order approving issuance of fiscal stabilization bonds not to exceed $20,000,000; and
WHEREAS, On January 14, 2011, the City of Flint submitted an application to the State
Administrative Board for authorization to issue fiscal stabilization bonds, which included a
statement signed by the Mayor indicating how the City intends to avoid future deficits; and
WHEREAS, On January 24, 2011, the Flint City Council adopted Resolution #110107 as the
City’s formal Deficit Elimination Plan; and
WHEREAS, the Department of Treasury recommended a revised application by the City of Flint
for $8,000,000 in bonds for Fiscal Year 2011 and was willing to reconsider an additional
$12,000,000 in 2013; and
WHEREAS, the Department of Treasury and the State Administrative Board approved the City
of Flint to receive $8,000,000 in Fiscal Stabilization Bonds as of March 15, 2011; and
WHEREAS, According to MCL 141.921 and the Attorney General Opinion No. 6154, if a local
unit of government ends its fiscal year in a deficit condition, the local unit of government shall
formulate and file a financial plan with the Department of Treasury within 90 days after the
beginning of the fiscal year to correct the deficit. The local unit of government shall file the
financial plan with the Department of Treasury for evaluation and certification to ensure the
correction of the deficit condition. Upon certification by the Department of Treasury, the local
unit shall institute the plan; and
—‘a
WHEREAS, The Department of Treasury fhrther states that the deficit elimination plan should
identify exactly how the deficit is to be eliminated. The plan should also be approved by the
legislative body; and
WHEREAS, The Administration has developed a deficit projection of revenue and expense and
formulated a deficit elimination plan (see attached Schedule A) according to State guidelines;
and
WHEREAS, The Administration intends to recognize the $8,000,000 bond in the General Fund
and transfer the appropriate amounts to the corresponding funds to cover the various deficits; and
WHEREAS, The Administration intends to have a balanced budget for Fiscal Year 2012, and
apply for a $12,000,000 Fiscal Stabilization Bond in Fiscal Year 2013 to correct its remaining
deficit;
NOW THEREFORE BE IT RESOLVED, That the City Council hereby adopts the attached
Deficit Elimination Plan for submission to the Michigan Department of Treasury.
Approved as to F rm: Approved by the Mayor:
Pe er Bade Dayne Wal ng
Ch ef Legal Officer Mayor
Approved as to Finance:
Mi≠aQf’A. Townsend C)
Fi4’arice Director |
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Sun Nov 06, 2011 5:11 pm |
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untanglingwebs
El Supremo
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Flint officials planning to borrow another $12 million to cover deficit
Published: Friday, May 20, 2011, 9:28 AM Updated: Friday, May 20, 2011, 10:06 AM
By Kristin Longley | Flint Journal
FLINT, Michigan — The ink is barely dry on the city’s recent $8 million bond issue, but already Flint leaders are planning to borrow another $12 million to cover the rest of the budget deficit.
Officials said cuts in state aid and reduced property tax revenue are mostly to blame for Flint’s $20 million budget hole — and they say cutting their way out of it just isn’t an option.
So the new deficit reduction strategy hinges on another $12 million bond issue in two years, assuming the state approves it.
“For us to cut another $12 million, it would be very difficult for us to not hinder the services that are minimal now,” Finance Director Michael Townsend said. “It was unrealistic.”
This year, the state rejected the city’s request to borrow $20 million to cover the entire deficit.
The state eventually approved an $8 million fiscal stabilization bond in March, and Townsend said the Department of Treasury indicated it would be willing in 2013 to consider an additional $12 million, the balance of the deficit from past years, dating to 2008.
The city was hit this year with state budget cuts that equaled an $8 million cut to state-shared revenue, money the state distributes to local governments each year. The city also is taking in less property tax revenue.
Townsend said the administration has made cuts to every general fund department, and fee increases are being proposed.
“We still have a $12 million problem,” Townsend told the Flint City Council on Wednesday. “We’ll use the $8 million we already received to make sure we do not have a deficit in 2011. In two years, we’ll go back and ask for $12 million in bonds to eliminate the deficit total.”
Caleb Buhs, spokesman for the Department of Treasury, said the state will be open to that discussion when the time comes.
Nearly 12,000 municipal bond issuances are completed each year, according to a fact sheet issued jointly by the National League of Cities and other municipal organizations.
The vast majority of those bonds are for roads, sewers and other capital improvement projects, said Eric Scorsone, professor of state and local government issues at Michigan State University.
He said it’s rare for cities to issue deficit bonds, but the recession has led to an increase. In Michigan, deficit bonds require approval from the State Administrative Board, made up of delegates from the governor’s office, treasurer’s office and other executive offices.
Cities that issue bonds usually have few alternatives, he said. Under state law, there are limits on tax increases, and increases in fees generally don’t generate enough revenue.
A city can cut spending with “layoffs or other quick cuts of that nature, but again there’s probably limits to how much you can do that and how quickly,” he said.
“In this case, there might not have been many other good options,” he said.
The drawbacks to municipal deficit bonds include interest payments.
“You’re going into debt for a deficit, which is probably not ideal,” he said. “It may be necessary, but you’re going to pay back more money over time. It’s also a signal of pretty serious fiscal stress.”
The Flint City Council moved the new deficit elimination plan forward Wednesday and will consider it further at its regular meeting Monday.
Flint City Councilman Scott Kincaid said a bond plan is similar to what the city did under Emergency Financial Manager Ed Kurtz in 2004.
“This isn’t an unusual step,” he said. “When I look at pooled cash and the budget, there’s no other alternative right now.” |
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Sun Nov 06, 2011 5:21 pm |
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untanglingwebs
El Supremo
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The figures do change after the beginning of the new fiscal year because one revenue sharing check usually comes in in August after our fiscal year has ended. But there are bills that must be paid and Walling still shows bills in the pending invoices that were from last years budget.
This will be a first to have them change this much, especially when MSU also worked closely with the finance department. |
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Mon Nov 07, 2011 7:29 am |
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