Saratoga County

Saratoga Springs surplus hits $6.2M

The city’s unrestricted fund balance has increased more than $2 million since 2010 to $6.2 million,

The city’s unrestricted fund balance has increased more than $2 million since 2010 to $6.2 million, city finance officials said Monday.

In a related development, the city’s bond rating, a barometer of its financial health, has increased from AA to AA+ for 2012, according to city Finance Commissioner Michele Madigan.

“The upgrade reflects our assessment of the city’s diverse and expanding economy and increasing reserves,” says a statement from Standard & Poor’s Rating Services about the reason for the bond rating upgrade.

Madigan said Monday reasons for the growth of the fund balance — unspent revenue from previous budget years — include receiving a share of video lottery terminal revenue from the state in 2011 and 2012 and seeing greater-than-expected growth in sales tax revenue over the past two years.

She hopes to bring spending recommendations to the City Council in coming weeks on ways to use the unassigned fund balance, including much-needed renovations to the city police headquarters in the basement of City Hall.

Another recommendation will be to create a special reserve fund in the city budget to help pay the ever-increasing annual state retirement fund premiums.

Christine Gillmett-Brown, the city’s finance director, reported after a recent update of 2011 budget numbers that the city’s “unassigned fund balance” is about $6.2 million, an increase of about $2 million over 2010.

This reflects a 2011 operating surplus of $3.5 million, of which $1.5 million is restricted or assigned, according to a statement from the finance office.

“I’m in a very unique situation,” said Madigan, who took office in January.

She said several years ago, during difficult economic times, the City Council made deep budget cuts but allowed the fund balance to increase in size.

Under the city’s Unrestricted Fund Balance policy, the audited unrestricted fund balance for the general fund should equal 10 percent to 12.5 percent of the total adopted general fund budgeted expenditures of the ensuing year. This year’s budget is $37.1 million, so under the policy, the current fund balance is about $1.55 million too big.

Once the fund balance is audited, Madigan said, the finance commissioner is required to make recommendations for how to fill the deficiency or, in this case, spend the excess.

She said it is best to use the surplus to offset one-time expenditures, “and/or expenses which do not result in recurring operating costs.”

The city’s unrestricted fund balance policy and adherence to it was a key component in Standard & Poor’s Rating Services recent upgrade to the city’s bond rating from AA to “AA+” for 2012, Madigan said. In addition, S&P gave the city a “stable outlook”, as well as a financial management practice assessment of “good” (upgraded from stable).

It is a high rating for a municipality, and should result in lower interest rates when the city needs to issue bonds.

“In the last several budget seasons, critical city resources have been slashed while the fund balance has been increasing,” Madigan said in a prepared statement.

“My goal is to retain a fund balance sufficient to meet our unexpected and other needs, while ensuring the integrity of our essential city services,” she said.

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