Moving into August, the Council and city manager and his staff are making preparations to begin the most important process the Council undertakes each year—our annual budget. As business people, we all understand the importance of developing a yearly budget and then being disciplined enough to abide by its decisions as closely as possible. The process is complex and the needs are significant. Over the next several months we will listen, analyze, deliberate and debate in an effort to make the best decisions and provide for the essential needs of our citizen taxpayers.
The city is required to audit its books and records annually in accordance with General Accepted Accounting Principles and Government Auditing Standards. The City of Peoria’s fiscal year coincides with the calendar year. The 2006 audit was performed by the accounting firm of Clifton Gunderson, LLP.
In 2006, the city’s revenues exceeded expenses by $3.9 million, of which $2.2 million was placed in the city’s “savings account,” or rainy day fund, known as the undesignated General Fund Balance. The city’s reserved and designated General Fund Balance is $20.6 million, which includes the funds for health, general liability, debt service and other restricted funds. The undesignated General Fund Balance was $8.7 million and the total General Fund Balance was $29.3 million as of December 31, 2006. The city’s Fund Balance represents approximately two months (68 days) of operating cash excluding debt service.
These results are superior in light of the challenges facing many other governmental entities in the state and the nation. The city maintains an “AA” rating with Standard & Poor’s on general obligation debt and an “AA+” rating on a portion of the city’s other debt. The city’s rating from Moody’s is “Aa3,” and we believe that this rating will be increased in the near future. This reflects the confidence the rating agencies have in the Peoria economy, the Board of Directors (i.e. City Council) and the management of the city.
These operating results were not achieved without making some difficult decisions. In 2007, the city complied in a timely manner with Governmental Accounting Standards Board guidelines for the funding of current and future health benefit costs. The private sector has been required to accrue for these benefits since the 1990s. The Labor Management Health Care Committee, composed of city management and labor leaders, analyzed city programs and reduced the city portion of benefit costs by $2.3 million through benefit changes and increased employee and retiree contributions. These savings are designated to fund the escrow account, leaving virtually no impact to the 2007 budget. The city has been a leader in successfully complying with these new reporting requirements. A lot of hard work and compromise between the Labor Management Health Care Committee allowed us to accomplish those results last year.
The Council is eager to begin the budget process. Having a strong working relationship with the city manager and his staff makes the entire process flow. Creating a budget and finishing the year with a surplus is something in which we can be proud. Balancing the growing needs of our city is not a simple task, but we will strive to do our best. IBI