The City of Coronado recently adopted its budget for fiscal year 2013-2014. Over the next twelve months Coronado is projecting General Fund revenues of $42 million and expenditures of about $41 million leading to a surplus of nearly $1 million. This surplus will increase the year-end balance of our General Fund Reserves to about $40 million dollars. The General Fund Reserve is essentially all of the running surpluses our city has accumulated since its inception and not yet spoken for.
When comparing to a personal household, the General Fund Reserve would be analogous to all the cash sitting in your bank account in addition to the amount you’ve already budgeted for your child’s college education, car maintenance, house maintenance, a future vacation, etc. A standard best practice for cities is to have a General Fund Reserve equal to about 20% of annual General Fund expenditures –Coronado’s General Fund is equal to nearly 100% of annual expenditures.
To help ensure the city remains financially healthy in the future, a unanimous city council took a proactive step and made a $5 million dollar payment to CalPERS (California Public Employee Retirement System) towards a portion of the city’s unfunded pension liability. Pension contribution rates increased for FY 2013-2014 by 5.8% based upon portfolio losses and actuarial assumption changes which directly affects how much the city pays annually towards pension costs. By taking the prudent step of paying down a portion of the city’s unfunded pension liability, the contribution rate decreases leading to savings of taxpayer money now and for years to come. Because city pensions are a complicated subject I will be writing a detailed description of our current position in a separate column over the next few weeks.
The dissolution of redevelopment has left many residents concerned over what happens to the debt owed by the Community Development Agency (CDA) as it relates to the City’s budget and impact to taxpayers. Redevelopment is another topic that warrants an additional column with a detailed explanation but generally speaking the CDA financed the construction of many buildings by issuing bonds. There are two important facts essential for assessing our city’s exposure to this bonded debt. First, no portion of the City’s General Fund was pledged as security for the bonds issued by the Community Development Agency. Second, the City of Coronado and the CDA are two separate legal entities per California State Law Health & Safety Code Section 34173 which states “A successor agency is a separate public entity from the public agency that provides for its governance and the two entities shall not merge.” Furthermore the law goes on to state “The liabilities of the former redevelopment agency shall not be transferred to the sponsoring entityÂ…”. Since no portion of the general fund was pledged as security and the CDA is a separate legal entity, the city is not liable for one penny of redevelopment debt.
I believe Coronado is in a strong financial position now and is taking the proper steps to remain strong in the future. All of the City’s financials undergo review by city staff, independent auditors, city council, and are available for the public’s viewing. If you would like to read through the budget you can find it printed at city hall or online at www.coronado.ca.us.
Coronado is the envy of many cities within our region because of our strong financial position. Much of the credit belongs to previous City Councils and an engaged community that held elected representatives accountable. But credit is also due to our city staff for preparing the financials and executing the direction of council -I believe our staff is second to none.
If you have any questions or would like to be added to a city council update email list please contact me anytime.
Councilmember and Optimist
Richard Bailey
