FOR IMMEDIATE RELEASE
January 27, 2016
Contact: Jennifer Kaulius
802.324.2505
FY15 Audit Documents Further Financial Progress
Administration Will Not Seek FY17 Property Tax Rate Increase;
City’s Internal Controls and Financial Management Improve;
Healthy Operating Surplus and Growth of Important Unassigned Fund Balance
Burlington, VT – Mayor Miro Weinberger today released the following statement regarding the Fiscal Year 2015 (FY15) audit, which was unanimously approved and accepted by the Board of Finance and City Council on Monday night, January 25, 2016:
“The FY15 audit confirms further progress towards the financial goals that the City Council, Department Heads, and Burlington voters have worked hard to achieve over the past four years,” said Mayor Weinberger. “I am optimistic the strong results will allow us to meet our infrastructure investment and reserve funding goals for the current year, and accomplish important initiatives next year without a property tax increase.”
The FY15 audit, conducted by the auditing firm Melanson & Heath, documents an over $2.8 million dollar operating surplus (actual revenues against actual expenses in the City’s main General Fund account). The General Fund surplus comes from systematic efforts across the City to control costs and identify new potential revenue sources, a strong local economy, as well as the sale of City assets. For instance, the City’s FY15 gross receipts tax raised over $350,000 more than budgeted, and actual revenues are up over $600,000 in the last two years. In all four of the General Fund accounts, the City’s revenues finished for the year more than $800,000 above budget projections, while expenses in all General Fund accounts were lower than budget by over $2.5 million for a total surplus in all four accounts of over $3.3 million. Positive developments with other committed and non-spendable items raised the critical metric of the unassigned fund balance to $4.2 million in FY15.
The audit also documents continued improvement of financial management and internal controls in the City. Over the past four fiscal years, the City has reduced the number of findings in the Management Letter from 27 to four and the number of material weaknesses from 12 to two. Further, for the second year in a row, the auditor has issued a “clean” audit without the qualifications that clouded the City’s audit from 2009 through 2014.
No decisions were made at the January 25, 2016 City Council meeting regarding how the $4.2 million fund balance will be managed. In the weeks ahead, the Administration intends to work with the City Council to allocate the fund balance to:
- Fully fund the FY16 Capital Plan. The FY16 budget made $1.3 million of investments planned for the first six months of 2016 contingent on available fund balance surplus and further City Council approval.
- Maintain significant unassigned funds consistent with the new fund balance policy approved by the City Council in 2015. This fund balance policy serves as a “rainy day” reserve that is available in the event of an emergency or substantial economic downturn. The additional liquidity such a reserve provides the City has been specifically identified by Moody’s Investors Service, the City’s credit rating agency, as an important factor in the agency’s consideration of future credit rating upgrades. Improvements in the credit rating allow the City to borrow money at lower interest rates and save taxpayers substantial dollars over time.
- New FY16 emerging initiatives or FY17 reserves. For example, the Administration is considering proposing new investment in strategies to address the growing opiate challenge. These initiatives remain under review and will be the subject of future City Council action and approval if they proceed.
As a result of the strength of the City’s financial position, the Administration will not be putting forward any property tax increases for FY17 (Monday night was the final regularly scheduled City Council meeting in which ballot items could be approved in time for inclusion on the Town Meeting Day ballot).
*Please see attached draft FY15 audit, draft FY15 management letter, and associated memo from the Clerk/Treasurer’s Office. These documents, marked draft, were approved and accepted by the Board of Finance and City Council on Monday evening and will be updated without the draft watermark in the coming days.
# # #
