NORWALK, Conn. – Norwalk’s financial health is good, government officials said Monday, citing a recently delivered audit of the last fiscal year and revenue collection reports through Jan. 2.
The available fund balance grew $1.2 million in Fiscal Year 13 (FY13), Finance Department Director Thomas Hamilton said at Monday’s Board of Estimate and Taxation (BET) meeting. Projections for revenue collections in Fiscal Year 14 (FY14) indicate the city might collect $1.9 million more than estimated, said Director of Management and Budgets Bob Barron, who stressed that the projections are a “best guess” at this point.
The FY13 report:
Hamilton was citing an audit (officially, the Comprehensive Annual Financial Report, or CAFR) of FY13, which was delivered to the city Dec. 30 and was performed by the accounting firm McGladrey.
The city’s “net position” increased by $16.9 million or 4.6 percent in FY13, the audit says.
The city’s assets were $624 million, while the total liabilities were $333 million, the audit says. That made the total net position $291 million. Most of that is invested in capital assets, leaving $6.5 million in unrestricted assets, the audit says.
“That’s a positive number,” Hamilton said. Most other Connecticut large cities, with the possible exception of Stamford, have negative numbers, he said.
Norwalk’s businesslike activities – the Water Pollution Control Authority (WPCA) and the Norwalk Parking Authority – also have positive assets, Hamilton said. Together, their net position was up $12.8 million in FY13. It was up $2.1 million in Fiscal Year 12.
Hamilton tried to compare the picture to accounting phrases from the private sector.
“If somebody asks the question, ‘Well how did you do during the year? Did you have a positive year or did you have a negative year, or in the private sector, did you make a profit or did you lose money?’ Well, this is the statement that answers that question for you,” he said. “So the bottom line … we started the year with our government activity, with a net position $278.9 million, we end the year with $290.6 million, so we had a positive change in net position.”
Or, “We made money. We didn’t make money, but our net position improved over the year,” he said.
BET member James Feigenbaum joked that meant a higher dividend.
The general fund went up $2.3 million or 7.3 percent in FY13, the audit reports. Of the total of $33.434 million in the general fund, $29.75 million is unassigned, or, nothing is yet expected to be paid with the money. It’s in the bank, and is sometimes called the Rainy Day Fund. In June 2012 there was $28.531 in the fund.
The tricky part was assigning a percentage number to that fund, Hamilton and Barron said. The city’s charter calls for it to be between 5 and 10 percent of the city’s operating budget for purposes of getting a good bond rating. The Finance Department tries to stay at the 9 percent mark, they said.
Norwalk has maintained its Triple A bond rating. There are 169 towns in Connecticut and 13 are Triple A, they said. Most of those are in Fairfield County, and most of them have a much higher median income than Norwalk, they said. Norwalk’s median income is $73-74,000 a year, Hamilton said, while Darien’s is somewhere around $174,000, he said.
Stamford lost its Moody’s Triple A bond rating because its fund balance dropped and has not gotten back, they said.
“Honestly, they should be Triple A if Norwalk is Triple A, but it’s because of the fund balance,” Hamilton said.
The rosy projections:
Nearly $2 million has been collected in real estate conveyance taxes for FY14, which is 73 percent of the $2.7 million that had been budgeted in for the entire year, Barron said. A projection based on the mathematics estimates that a total of $3.476 million may come in, 28.8 percent more than anticipated.
Building permits are also way up, as previously reported. As of Jan. 2, the date the report was run, the city had collected $2.169 million in building permit fees. That is 83.4 percent of what had been budgeted for the entire year.
Investment income and recording fees are lower than anticipated. But the higher numbers of building permits and real estate taxes offset those lower numbers, and the city is projected to take in $1.9 million more than expected.
That’s a conservative number, but still a guess, Barron said.
“Right now it’s looking pretty good,” he said.
Mayor Harry Rilling asked why the recording fees were down 1.8 percent if the real estate conveyances were up.
Hamilton said he suspects refinancing activity is down. BET member Erik Anderson, who works in banking, confirmed that.
Barron also said the biennial tax sale, scheduled for June, was driving tax revenue collection. The city has collected $510,000 since a mailing went out in November to properties scheduled to be on the sale.
“We anticipate more in tax collection,” Barron said. “People will come and pay their current taxes and pay their back taxes, too.”
See for yourself
The audit Hamilton references can be found here. Scroll down to pages 11 and 12 for what Hamilton said would be called the balance sheet in the private sector. Page 12 would be full accrual accounting. The fund balance is on page 13.
The BET agenda is attached below. Page 137 is the tax collectors report. Page 138 is the summary of key revenue drivers.
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