I’ve been studying the city of Emeryville’s Comprehensive Annual Report covering the year ending June 30, 2012. Not an easy read at 206 pages, but it gives a useful picture of how we are doing as a financial entity. My general impression is that the ship is afloat and riding fairly high in the water, at least for now. Quarterly reports since that June, 2012 date confirm that impression. Here are some things that caught my eye:
Sales tax revenues are up 2.5% from June, 2011 and transient occupancy taxes are up 18%. Other revenue sources remain stable. These are not bad signs given the lingering effects of the Great Recession. Property tax revenues jumped 81% as a result of the dissolution of the city’s Redevelopment Agency, a one-time phenomenon. This surge tells us little about the future.
Total expenses for governmental activities were $47.9 million in fiscal 2011-2012, a decrease of $25.5 million from the previous year. Dissolution of the Redevelopment Agency was responsible for most of the drop. The city’s departments, in the main, have been coming in under budget for the work they do. In keeping with our budget philosophy, one-term windfalls are not being used for long-term projects, the General Fund reserve is at 25% of operating costs, and the Economic Uncertainty Fund stands at 19% of the General Fund. The city is running a tight ship, and that’s wise policy in uncertain times.
The unemployment rate in Emeryville was 6.1% in June, 2012, compared to 7.9% the previous year. To put that in wider perspective, Alameda County had an unemployment rate of 8.6% last June. Here again we have good signs. Let’s hope the real recovery from the recession, that is, people getting back to work at decent jobs continues.
The Annual Report offers useful information on city debt, most of which was generated by activity of our now-defunct Redevelopment Agency. Long term liabilities as of July, 2011, stood at $175,417,781. The cost of financing that debt annually is $8,700,290. I didn’t find a combined figure for both principle and interest in the report, but assume it must be about $250,000,000, the amount the City Treasurer gave me a year or so ago. Debt per capita for our small town is $16,690. That sounds like a lot, but cheer up: the figure peaked back in 2005 at $24,401 a person. Another way to get perspective on debt is to look at state law governing the ratio of debt to total assessed property value in a city. The state sets a maximum of 15% debt to assessed value. We stand at 4.26%.
No one can predict the over-all play out of shutting down the city’s Redevelopment Agency. Will we be owed or will we owe? Will law suits be required? The Annual Report offers no answers to these questions. If it’s any consolation, cities across the state face the same uncertainty. Our financial future hinges, then, on two big uncertainties: the final results of the RDA shutdown and, of course, the fate of the global economy. So far so good.
Bill Reuter, Resident Member and Chair, City of Emeryville Finance Advisory Committee
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