COVINGTON - The city of Covington is in sound financial condition, according to a report given by City Clerk/Finance Director John Grotheer at the city council's Monday night meeting.
At the beginning of July, the city's governmental funds had combined ending fund balances of $21.1 million, Grotheer reported.
The city also has a $2.3 million reserve in the water and sewer account, a general fund reserve of $2.6 million and CD's amounting to $7 million.
All told, the city has approximately $40 million in cash accounts, according to City Manager Steve Horton, though he said that's no reason to rest easy.
"We realize times are tough. We're not taking it mildly. ... We're not going to do projects we don't need to do," Horton said. "If it's not a service to our customers, we're not going to do it. We've got some things to help us weather the storm, and we are in a storm. We just happen to be in better shape than a lot of other cities."
Grotheer also reported that the city's tax digest increased by $17.3 million from 2007 to 2008 - from $650.9 million to $668.2 million, an increase of 3 percent.
The city's net tax levy was $5.4 million for 2008, an increase of nearly 2.6 percent from 2007.
Reassessments decreased property values by $1.5 million, but the growth in the digest was enough to offset that.
So far, the city has collected $2.5 million in ad valorem tax revenue for fiscal year 2008. Grotheer said he anticipates a decline in tax collections due to the economy. If the legislature does not reimburse local governments for homeowner's exemptions, Grotheer recommends the city absorb the loss, totaling $132,371, rather than rebill taxpayers due to the cost of billing.
Behind property taxes, the second largest source of revenue for the city is local option sales tax revenues. Grotheer said the city has budgeted for $2.5 million in collections during this fiscal year, which runs July 2008 to June 2009. From July through October, the city had collected $673,645, but larger distributions are expected in December due to the holiday season.
National sales tax collections are expected to decline by about 4 percent, Grotheer said, but large retailers Home Depot and Wal-Mart could help Covington stay on top.
In addition to LOST monies, the city has $3.6 million in special purpose local option sales tax funds for transportation projects.
Grotheer also reported that the cost of wholesale power purchased from the Municipal Electric Authority of Georgia decreased by 4 percent, from $9.4 million to $9 million, from FY 2007 to FY 2008.
Meanwhile, the cost of gas purchased from the Municipal Gas Authority of Georgia increased by 39 percent during that same time period, from $3.6 million to $5.1 million.
Grotheer said the city ranks as the lowest-cost gas provider among all Atlanta Gas Light Company marketers.
Fuel costs increased by $207,393 from July through October of this year, but declining gas prices are expected to have a positive impact on the budget, Grotheer said.
The city continues to work to retire debt by making monthly payments and maintaining a reserve in the MEAG Trust of $24 million. Also, the city paid off $4.5 million in outstanding debt in 2007, opting to pay off higher-interest debt, which "resulted in substantial savings in interest expense," Grotheer said.
To continue to save money, Grotheer reported that several vacant job positions will not be filled, resulting in an annual savings of approximately $600,000.
A slowdown in capital projects is also anticipated due to the downturn in the economy, he said.
The city has operated without any budgeted increases to taxes and utility rates this fiscal year, he said.
"As the city's finance director for the past 12 years, I am pleased to report the city has always operated within a balanced budget even in today's tough economy," Grotheer said. "At this time, I would like to thank our mayor and council and city manager. It is because of you that the city of Covington continues to be financially sound and prosper."
Crystal Tatum can be reached at firstname.lastname@example.org.