It looks like Warwick will complete another year in the black – the 12th time the city has done so in the last 13 years.
Last week, Mayor Scott Avedisian announced preliminary audit figures had the city closing the year ending June 30 with a $3.4 million surplus. Of the amount, $2.6 million will flow into the unrestricted reserve, boosting it to $10.6 million. Reserves have been higher than that but not in a long time.
So, what does it mean and how might this affect taxpayers?
First, the bulk of the surplus represents better than projected tax collections. As nice as it would be, the greater returns probably don’t reflect a brightening economy. Rather, the city tightened its collection efforts and many delinquent payers paid their bill or made a payment arrangement before the tax sale. The sale came after the end of the fiscal year, but proceeds were applied to last year.
Second, as Avedisian observed, virtually every department finished the year under budget. That is an accomplishment worthy of crowing about.
Some could argue had the administration done a better job of pinpointing revenues and expenses, the budget needn’t have been as much as it was and taxes could have been less. That’s true, but the outcome is always better this way than the reverse.
The surplus won’t change the city’s bond rating, at least for the foreseeable future, either. Although rating agencies will look at the surplus and see it a plus, the reserve is less than half of what is considered ideal. Rating agencies like to see reserves equivalent to 10 percent of a municipality’s budget. To meet that threshold, Warwick would need reserves of more than $23 million.
Avedisian says that’s not going to happen. This administration won’t be jacking up taxes with the intent of adding to a rainy day fund. That’s a good thing.
But, let’s face it; while other Rhode Island municipalities teeter on the cliff of bankruptcy, Warwick is in reasonable shape. We have the unions to thank, for foregoing raises; the administration, for running a tight ship; and the taxpayers for coming through, even in difficult times. Twelve surpluses in 13 years is a good thing.