Molino: City back in the black
The City of Batavia is out of the red on its operational ledger.
For fiscal year 2009, Batavia has a fund balance of $32,950, City Manager Jason Molino told reporters today.
Even though the city has been spending less than it takes in starting in 2007, this marks the first time in years that the city is not carrying a deficit on its balance sheet.
"We're not borrowing to pay for operations," Molino said. "We don't have cash flow problems."
In 2006, the deficit on the fund balance was a deep dark red -- $2.2 million.
"Most municipalities in this situation have gone to the state legislature to bond out their debt and that's a lengthy process," Molino said. "What you had happen here is you had a council committed to trying to right the ship and make the right decisions."
Among the right decisions, Molino said, was committing to conservative revenue budgets. The city has ensured expected revenue aligns realistically to numbers based on historical trends.
"The problem in prior years, and I'm talking three years back, was aggressive revenue budgeting," said Molino. "As a result, actual revenues did not meet budgeted revenues. As you can see from '05 and '06, your actual revenue was below your budgeted revenue."
The fund balance is for operational expenses and excluding debt for buildings and similar expenses.
For 2009, city revenue was $14.7 million and expenditures were $13 million. That $1.7 million swing helped the city generate a fund balance (meaning money in the bank rather than paying debt on operational expenses) for the first time since at least 2005.
On the expense side, Molino said the city has been able to hold the line on spending because department heads have done better at cutting things such as utility costs. At the wastewater treatment plant, for example, electricity usage has gone down by several hundred-thousand dollars. He also mentioned consolidated dispatch as a cost savings.
"It's identifying issues where expenses can be cut and that's really been a focus of the change in operations," Molino said.
The city isn't completely free of financial worries. It has not yet built up sufficient reserves to deal with unexpected expenses or any dip in revenue.
"To be financially healthy, you want your undesignated fund balance to be about 10 percent of your operations budget," Molino said.
He said the city's fund balance should be $1.3 million to $1.4 million, which is a pretty big number compared to the $32,000 the city just achieved.
Even so, Molino acknowledges that getting city finances to this point, is a satisfying accomplishment, but he credits both the Batavia City Council and city staff:
"It's interesting because when we dealt with it three years ago, it's one of those things that's out a ways and it takes time to get there and to look at the progress from year one to year two to year three. It's kind of interesting to know that when the council...adopted the idea that we don't want to go to the state to bond out our debt, we want to make the right changes that maintain levels of services, (we had to figure out) 'how do we get there?' We set that plan out. It's really a tribute the council making the difficult decisions at the time and a tribute to the staff that they made the tough changes."
The next hard task is mapping out the future.
"The damage control part of it is over now and now it's the planning part," Molino said. "Planning today for tomorrow is really the city's top priority."
Looking ahead, he said the city will need to focus on economic development, future union negotiations, upcoming retirement costs, reserve funding and post-employment health care costs for retirees (which could top $9 million).
Jason Molino discusses city finances with press: