KINGSPORT ‚¬ Kingsport posted a clean Fiscal Year 2013 audit from BrownEdwards certified public accountants for the year ending June 30, posting only one minor finding regarding the classification of an improved Cleek Road, while also noting that overall debt fell from the previous year amid a solid rebound in revenues.
Total debt decreased by $15.6 million, about 7 percent, due to rapid principal payments as well as a bond refunding that brought lower overall interest rates.
Overall, the City pays down debt at a fairly rapid clip, City Manager John Campbell said Friday. And I would add that in more than 30 years of public service, this audit is probably one of the best audit results I have seen. It speaks highly to the quality of our finance staff, budget staff, and management team as well as the Board of Mayor and Aldermens keen attention to the financial performance of the City.
The singular finding in the audit, which was deemed a deficiency but not a more serious material weakness, took issue with the fact that the City classified the Cleek Road project as an expense, instead of immediately adding the project as a capital asset.
In past years, finance staff would have waited until the project was completed to classify it as a capital asset for depreciation purposes, but will now move quicker on such classifications.
The City remains on solid financial barting, and I could not be more pleased with the results of this audit and comprehensive annual report, Vice Mayor Mike McIntire said Friday. McIntire is the chair of the BMAs audit committee. The City is a complex, multi-fund operation, and I can assure you, having helped manage similar organizations elsewhere, the City is in good financial shape.
McIntire said he was particularly pleased that the Citys total debt had dropped by a significant sum, although a subsequent bond issue to address water, sewer , and other public facility needs will add back to that sum in the FY 2014 report.
We need to continue to focus on paying down our debt while maintaining the best possible services, McIntire said. Its a balancing act, and one the Board must keep a close eye on.
The City in 2013 was at 39 percent of the Charter established debt limit, down from 42.25 percent the previous year. The Charter establishes the Citys debt limit as 20 percent of the assessed value of the community.
In a further stamp of approval, Standard & Poors recently raised the Citys debt rating to AA while Moodys Investor Services reaffirmed at Aa2. These are the highest ratings the City has ever held.
In all, the City maintained a general fund balance of $11.53 million, which is about 17 percent of annual General Fund expenditures. The General Fund accounts for most basic governmental services, including K-12 education, police, fire, planning and building, codes enforcement, economic development, and city administration.
The fund balance is an area we need to work hard to bolster, Campbell said. With that said, a property sale and a large personal property tax adjustment on a single entity that occurred after the close of FY 13 should significantly improve the reserve in 2014.
Outside of the unassigned General Fund Balance, other undesignated balances that could be moved should the Board direct include $6.2 million in unrestricted reserves available in the Internal Service Funds, which include Fleet Maintenance, Insurance, Health Insurance, and Retirees Health Insurance funds.
K-12 Schools, which are funded through both state and local dollars, retained a fund balance of $3.264 million in General Purpose School Fund.
In all, the General Fund supports $106 million in debt for a wide range of activities, including education, public safety and the like.
Another $102 million in enterprise fund debt supports capital investments in water and sewer, the largest two enterprise funds, as well as MeadowView Conference Center, Cattails, Aquatic Center, Stormwater assets and Solid Waste collection and disposal equipment.
Revenues were up in 2013, with property tax collections up by $2.2 million, and sales tax revenues up $217,448, over the previous fiscal year. Hall Income Tax collections and Business Tax collections were up about $100,000 each.
Residents were also doing better as Per Capita Personal Income in the City rose to $34,975 from $32,390 the previous year.
I really feel like 2014 will be a strong year for Kingsport, Campbell said. We just received the first building permit in Eastmans Project Inspire effort, at $74 million for the construction of the new business services office facility. We know that project alone as well as Eastman hiring is going to have a tremendously positive financial impact on Kingsport as a whole moving into the New Year, and we are pleased by the increasing level of retail and residential interest in the community.