NEWS

$31.6M 'rainy day fund' never higher says former finance director

By JOHN HOWELL
Posted 5/21/20

By JOHN HOWELL Brian Silvia who served in the city finance department for the past 15 years and most recently as finance director said Friday that because of the administration's tight control of spending not only has it been able to give the city its

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NEWS

$31.6M 'rainy day fund' never higher says former finance director

Posted

Brian Silvia who served in the city finance department for the past 15 years and most recently as finance director said Friday that because of the administration’s tight control of spending not only has it been able to give the city its largest ever unreserved account [rainy day fund] but put it in a better position to deal with the financial fallout of the COVID-19 pandemic.

“The reserves have never been higher,” Silvia said. Responsible for building the framework for the 2020-21 budget Mayor Joseph J. Solomon made public last Wednesday, Silvia gave his notice more than two weeks ago and last week took on his new job as finance director for the Town of Smithfield.

The audit for the last fiscal year ending June 30, 2019 shows the city with a $31.6 million reserve account. The mayor’s proposed budget shows a $2.8 million draw down in order to balance the overall $323.5 million spending program.

The $31.6 million stands in stark contract to the projections Solomon made soon after becoming mayor in the spring of 2018 and his forecasts going into the election that fall.

In his “State of the City Address” on Feb. 26, 2019, Solomon reported the unrestricted fund balance was in “the danger zone” between $13 million and $14 million as compared to the $22.6 million reported in the FY17 audit.

Then in July of 2019 with completion of the FY18 the city revealed a fund balance of $22.6 million.

In a release at the time the administration said, “Due to austerity and cost saving measures implemented by Mayor Solomon upon taking office in 2018, the City’s unassigned fund balance (funds available for use) at the end of fiscal year 2018 actually rose by $104,000, to $22.6 million, and the total fund balance, including restricted funds, was at $27.4 million at year’s end.”

Now the latest audit for FY19 is showing an increase of nearly $10 million in the fund.

Silvia said a combination of factors including a cut of more than $2 million in school spending that eliminated a projected deficit and controls on spending produced the surplus. While there was no way of knowing about the pandemic or how that would impact city spending, Silvia said Warwick was in a good place financially to take the hit. So far he said tax collections are down, which he sees as resulting from the decision to delay the April quarterly collection to May as well as the caronavirus economic blow. He said collections picked up slightly before his departure and they should be “watched closely.” He thought that tangible tax collections would be off given the impact the pandemic has had on businesses.

It’s hardly all rosy.

Looking at the bigger financial picture as he has done during his tenure in Warwick, Silvia said pensions and OPEB, other than pension employee benefits, are “areas of concern.” These so called “legacy costs” including full payment of retiree health care, although active employees face a co-payment are the subject of an ordinance introduced by Ward 5 Councilman Ed Ladouceur.

Reflecting on his tenure in Warwick government, Silvia said, “I always wanted to work in my city.” As a practice, Silvia rode his bike to work. He said he now has a 20-minute drive to work.

Nonetheless, he’s thinking if the conditions are right he may ride his bike to work.

Comments

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Charlie B

So Soloman says the City is in dire financial straits and the "rainy day fund" (overtaxed fund) is about to go broke. Miraculously, now it at an all time high. Yet my taxes went up more in the first year of the Soloman regime that at any time in the past 25 years. Nice!!!!!

Thursday, May 21
Charlie B

Now it's an election year and he wants to "hold the line" on taxes. Hmmm, I wonder why.

Thursday, May 21