The City of Clear Lake continues to be a shining example of fiscal strength.
City Administrator Scott Flory gave the City Council an overview of the Annual Financial report he will submit to the Iowa Department of Management and State Auditor’s Office, as required by law. Flory pointed out the Iowa Constitution limits the amount of General Obligation debt a City may incur to no more than 5 percent of its 100 percent valuation.
“For fiscal year 2012, the City’s GO debt limit was $38,788,534,” reported Flory. “Typical advice from auditors and municipal financial advisors is that a City should not incur any more than 70 percent general obligation indebtedness or risk a potential lower bond rating. For Clear Lake, that threshold would be roughly $27.1 million. However, Clear Lake’s current level of GO bonded indebtedness is only $6 million or roughly 15.5 percent.”
Flory’s review of the city’s expenditures and revenues in fiscal year 2012 were a bit skewed because in many cases a project had not been completed by the end of the fiscal year and therefore funding for it was not reflected. Likewise, the city’s revenues and expenditures appear to show a good gain in revenue for the city, however Flory noted some expenditures the City expected to make in fiscal year 2012 have been pushed to 2013 due to the timing of projects. Flory noted a number of capital projects have not yet been completed in the 2012 fiscal year, including the CDBG project on North Shore Drive ($1.4 million), North Shore Drive Streetscape Project ($150,000) and Police Station/City Hall professional services ($60,000).
The City’s revenues are just under the $16,937,927 recorded for fiscal year 2011; however expenditures are significantly less in 2012. The 2012 revenues are $16,299,724 and expenditures are $11,165,416. Expenditures in 2011 were $14,026,079.
Flory reported the city experienced significant “budgeted” vs. “actual” variances in a number of areas. For example, Local Option Sales Tax revenues are $94,000 over estimate and Utility Franchise Fees are $10,000 over estimate.
A number of expenditures were also under budget, such as snow removal ($57,000), street maintenance ($47,000), utility and maintenance supplies ($44,000) and sidewalk improvements and street signs ($19,000). Mosquito spraying was not performed in 2012 due to the dry conditions. Also under budget was the Library Foundation ($13,000), Parks and Recreation contracted services ($10,000) and swimming pool operations ($14,000).
“The advice we get from financial advisors is not to do more than 70 percent general obligation bonds, property tax supported debt. That’s the standard figure across Iowa. The gold standard would be at 65 percent,” explained Flory. “We are at 15.5 percent.”
Even more impressive is that approximately one-third of the City’s debt is the result of a voter approved $2.3 million general obligation bond issued for the new fire station. Eighty percent of voters supported that measure.
“Clear Lake has probably among the lowest levels of tax supported debt in the - Read More Via e-Edition