Un-audited figures are showing the city will end the 2012 fiscal year with a $1,746,038 surplus, according to Mayor Scott Avedisian. Schools say they are on track for an additional $1.6 million surplus for the 2012 fiscal year.
Avedisian said Tuesday that a combination of greater than budgeted revenues and less than projected expenses will give the city its 11th surplus during the past 12 years. Assuming the surplus is solid, it would boost the city’s unassigned fund balance from $5,981,718 to $7,749,494.
The mayor hopes rating agencies will look favorably on the increase in reserves, although, he said, at this time he has no plans to issue additional bonds. The better the rating, the less the city can expect to pay in bond interest expenses. An improved rating could also reduce taxpayer cost if the city elects to refinance any of its debt.
Still, city reserves aren’t at the levels preferred by rating agencies. As a rule of thumb, Avedisian said, agencies are looking for municipalities to set aside 12 percent of their budget.
“I can assure you that 12 percent is not going to happen,” he said. He added, “We’re at least going in the right direction.”
A reserve of $7.7 million would put the city at about 5 percent of what agencies recommend.
Expenditures for the year ending June 30 fell below the revised budget by approximately $268,169, said Finance Director Ernest Zmyslinski. Revenues came in $1,477,869 over the final revised budget.
Asked whether unions might feel they gave away too much when they agreed to no pay increases and an increase in health care co-payments, Avedisian said, if it wasn’t for the unions working with the administration there wouldn’t have been surpluses.
“Most [people] will look at it and realize if everyone gives a little, we can get to where we need to be,” he said. He termed the surplus “a welcome development” and “very positive.”
Avedisian pointed out that the preliminary audit does not include numbers from the School Department. In years past, schools have ended the fiscal year with deficits and surpluses. In the event of a deficit, the city had to cover the shortage. However, Avedisian and the City Council have insisted that the department itself reimburse those shortages, which they have been able to do in successive years of surpluses.
The practice has been for schools to retain their surpluses and carry them over to the next fiscal year. The offset, however, is that usually the administration and council account for that in budgeting for the next fiscal year.
School budget director Anthony Ferrucci pointed out that in early August the department forecast a $1.6 million surplus and, on that report, the School Committee adopted a revised $156,996,741 budget for the current year on Aug. 14. Playing it safe, that revision boosted expenses by $1.1 million, if the full $1.6 million is not realized.
Ferrucci said the department is still showing another $500,000, which he said would help offset increases won by the Warwick Teachers Union in a contract announced on Sept. 1. He said he would present the committee with another revised budget in early November, using projections based on personnel costs.
“There is no evidence that we won’t be coming in at $1.6 million [surplus for the 2012 year],” he said.