City reserves could top $25 million

Drawdowns to take $4M bite

By John Howell
Posted 1/25/18

By JOHN HOWELL -- While the audit for the fiscal year ending June 30, 2017 is yet to be finalized, indications are the city will end the year with a surplus of about $7 million.

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City reserves could top $25 million

Drawdowns to take $4M bite

Posted

While the audit for the fiscal year ending June 30, 2017 is yet to be finalized, indications are the city will end the year with a surplus of about $7 million. That would put the city reserves at about $25.4 million for the largest surplus in the memory of those who follow Warwick finances.

The city’s strengthening finances is one reason why Moody’s Investors Service affirmed the city’s A1 bond rating and removed its negative outlook.

Moody’s is not alone.

In October, citing the city’s “very strong economy” as well as its retail base, development in City Centre Warwick, management and financial reserves, Stand & Poor’s Global Ratings raised its long-term rating on the city’s existing general obligation bonds from AA- to AA.

“I am pleased that Moody’s has determined that the City of Warwick’s economy is robust and growing, our budgetary practices are sound, and that our future outlook is bright. I am proud of the hard work of our city’s finance team, who has helped to ensure Warwick’s continued fiscal health,” Avedisian said in a statement.

Another surplus couldn’t appear to come at a better time. In balancing the current budget, the City Council drew down $1.2 million from the reserves and promised to allocate another $3 million to the School Department provided they reached an agreement with the Warwick Teachers Union. The teachers’ contract ended up costing schools $4.5 million more than budgeted because of retroactive pay increases, but the council kept its word and appropriated an additional $3 million.

Add what the council allocated from reserves to approve a no tax increase budget to the $3 million for schools and that $7 million surplus gets whittled down to about $3 million, says City Finance Director Bruce Keiser.

Keiser said a number of factors played into the $7 million surplus, the biggest being tax collections exceeding expectations by $4.5 million. The city budgeted collections at 98.5 percent. In the current budget, the council kicked up the collection rate to 99 percent.

Hotel tax revenues also exceeded projections in the last fiscal year, as did building fees, said Keiser. Hotel tax revenues were $1.5 million more than estimated.

Keiser thought the improved collections is a reflection of the economy. Looking ahead he doesn’t foresee anything such as major tax abatements resulting from a suit over property valuation or another unbudgeted expense that would significantly impact city finances.

As rationale for maintaining the A1 rating Moody’s writes, “The affirmation of the A1 rating on the city's GOs [general obligation bonds] reflects the city's improving financial profile, large, diverse and stabilizing tax base and manageable debt burden with future issuance plans.”

The Moody’s analysis goes on to say, “The removal of the negative outlook reflects our expectation that Warwick's financial position will continue to stabilize at levels sufficient for the rating category. The removal of the outlook further reflects our belief that the city's long-term liabilities will remain elevated, but manageable in the near term as indicated by the city's currently average fixed costs.”

The report also offers a glimpse of the impact of the recession and that, despite surpluses, a hot real estate market where there isn’t sufficient inventory to meet demand; new construction including a hotel; increased air traffic with the addition of international flights and a decline in the ranks of the unemployed, city property valuations still aren’t where they used to be.

Moody’s notes that the full revaluation of 2016 boosted the city’s tax base by 4.8 percent to $9.4 billion.

“Still, the city's tax base remains significantly below its 2008 pre-recession peak of $12.3 billion and its tax base has contracted at a five-year average annual rate of 1.2 percent,” it reads.

On the positive side, the report says, “The city reports it no longer has any major commercial tax appeals outstanding, which was an ongoing challenge through the economic downturn.”

Warwick cash reserves, Warwick financial news, Warwick fiscal facts, Warwick financial condition, Warwick taxes, Warwick bond rating

Comments

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  • davebarry109

    So our taxes won't be going up next year? HAHAHHAHAHAHAHAHAHHAAHAHAH......HAHHAHAHAHHAHAHAHAHHAH

    Thursday, January 25, 2018 Report this

  • richardcorrente

    Dear davebarry109,

    For my entire Mayoral campaign I have promoted "Cut Taxes - Cut Spending".

    I campaigned for over 700 days in a row meeting with thousands of Warwick taxpayers and gained a ton of strength for my mission to "Cut Taxes - Cut Spending". The result was that for the first time in 17 years, the Mayor was unable to push even one of his 29 tax increases through the City Council. Here is the step-by-step.

    1. Avedisian raised taxes for 17 years in a row. Every year Warwick taxpayers had to pay more and no one stopped him.

    2. Then, I came on the scene in January of 2016 and started a 700-days-in-a-row campaign..

    3. Then, thousands of taxpayers joined the "Cut Taxes - Cut Spending" movement and told their City Council just how they felt.

    4. Then, the City Council courageously said "No" to every tax increase the Mayor insisted on (all 29 of them!)

    And the result? Read it above davebarry109. Warwick is evolving from a tax-and-spend city to a tax-responsible city. I'm proud that my efforts had something to do with that. You can say it was a lot or you can say it was a little. Whatever you say, I'm proud that I helped cut taxes in Warwick. And davebarry109, no, your taxes won't be going up next year either; not if I have anything to say about it.

    Happy Valentines everyone.

    Rick Corrente

    The Taxpayers Mayor

    Thursday, January 25, 2018 Report this

  • Justanidiot

    cut taxes, cut spending, increase services,

    maybe we can get cranston to pay for our walls.

    Thursday, January 25, 2018 Report this

  • CrickeeRaven

    Here is the link to the adopted FY18 budget for Warwick: https://www.warwickri.gov/sites/warwickri/files/pages/adopted_fy18_general_fund_budget.pdf

    On page 11 of the PDF, the total expenditures for the current fiscal year are $305,271,737, a $6,543,618 increase from the adopted FY17 budget.

    Revenues from property taxes for FY18 are $230,264,242, an increase over the FY17 adopted budget of $3,657,290.

    Thus, the 29 amendments made to the proposed budget by the council did not cut taxes or spending from fiscal 2017 levels. The fake "mayor's" failed 2016 campaign had nothing to do with the council's decisions, nor did it result in a reduction in either tax revenue or spending.

    Last year, the tax rate went down, which the fake "mayor" still claims was an increase -- yet this year, when the rate stayed the same, he calls it a cut.

    Happy 284 days until tens of thousands of honest, taxpaying voters in Warwick again prove that they will not be fooled by the fake "mayor" and reject his candidacy.

    Thursday, January 25, 2018 Report this

  • Kammy

    Unfair CrickeeRaven! You used facts to support your argument. Don't you know that they aren't needed? You can say whatever you want to say and they are true because you said them!

    Did you know that I am the reason why we have a $7 Million surplus? Yes Sir! I was talking to a group of my friends and associates about how much I dislike paying taxes and why do they have to be raised all the time. Someone must have been listening in to my conversation because now the city is in great shape all thanks to me talking about how much I hate taxes. No praise or thank you is required. We both know I am the reason we look so good on paper. Maybe I should run for office?

    Friday, January 26, 2018 Report this

  • Justanidiot

    facts are scary

    Friday, January 26, 2018 Report this

  • CrickeeRaven

    Thank you for that moment of comic relief, Kammy.

    Like the best humor, there are elements of both absurdity and truth to it: Absurdity, in that anyone would convince themselves [and attempt to convince others] that repeatedly lying and making up baseless conspiracy theories would qualify him for office; and truth, in that he willfully refuses to correct his own false statements and instead claims a completely imaginary impact on anything that has happened in Warwick.

    And while I know you're joking, I would wholeheartedly support your candidacy if you decided to run and would even make a contribution to your campaign, knowing that you would not use such funds for -- just to use one example -- paying office rent to an individual who previously paid your delinquent property tax bill.

    Happy 283 days until you and I and tens of thousands of honest, taxpaying voters defeat the fake "mayor" again.

    Friday, January 26, 2018 Report this

  • wwkvoter

    That nut Corrente should be banned from here for spamming the comments section and always making the comments about himself with made up reality of his own creation. It's pretty sick.

    As to the story, a surplus is better than the alternative.

    Friday, January 26, 2018 Report this

  • wwkvoter

    Corrinte himself says "Warwick is evolving from a tax-and-spend city to a tax-responsible city."

    So glad he now endorses the path under current leadership of (real) Mayor Avedisian!

    Avedisian 2018!!!!

    Friday, January 26, 2018 Report this

  • CrickeeRaven

    Hello again WwkVoter:

    First, I completely agree with your assessment about having a surplus. It's a sign of stable fiscal management in the city that Warwick has a significant reserve account; that said, I also share other commenters' concerns about potential future financial bumps in the road.

    On your other point, unfortunately for the rest of us, the editorial management of this site has shown little effort in moderating the fake "mayor's" comments, even after they have been repeatedly proven objectively false.

    I have often wondered why the fake "mayor" would not use his own website or social media account to distribute his once and soon-to-be-twice failed campaign message. It is clear that he uses the Beacon website for free political advertising and access to its audience because it requires little forethought on his part, and he can delude himself into believing that he is actually gaining support for his candidacy. Why create or fund his own online platform when he can just squat on someone else's with no consequence?

    This leaves it to other commenters like yourself to point out his obvious failures and continued willingness to make a spectacle of himself on this site.

    Thank you for showing the fake "mayor" that he is wrong to believe he is doing anything but making an abject fool of himself and proving his total unfitness for office. I look forward to joining you and tens of thousands of honest, taxpaying voters in rejecting his candidacy again this November.

    Friday, January 26, 2018 Report this