Multi-Year Financial Plan
Fiscal Accountability Report
Fiscal Years 2010/2011-2013/2014
The City of Olean has suffered severe financial difficulty in the past seven to ten years, leading to the erosion of any fund balance accumulated in the General, Water, and Sewer Funds, and putting the City in a difficult deficit position. The Office of the State Comptroller prepared a report in March of 2007, which outlined several reasons for this erosion. Part of the problem was the Councils unwillingness to prepare a fiscally sound budget, due to the reluctance to raise taxes above 3% annually. In the 10-year period from 1996 through 2006, taxes were raised cumulatively 30.43%. Yearly rate increases ranged from a maximum one-year increase of 5.46% to a tax rate decrease in one year of -0.15%. However, in the past four budgets, the tax rate has increased by 13.70%, 18.87%, 11.47%, and 4.82%. The AIM aid has been used to offset tax increases for all years that the City of Olean has received it. Without the AIM aid in the 2009/2010 budget, the City of Olean would have had to raise taxes by an additional 37% to make up for the lost revenue, or cut basic services that the citizens of our City depend on by over $2,000,000.
In the prior year's Fiscal Improvement Plan, the City of Olean outlined ten items they were looking into to assist with the fiscal stability of the City. Eight of these items have moved forward, or are seen as successes, where as two items may not be such a success. These items are outlined below.
Prior Year Goals - Successes, achievements, or progressing:
1) Reduce negative fund balance.
Effective Budgeting – The use of historical trends
and conservative estimates have been used to create the last three
budgets. The City’s goal for each budget is to expend exactly the same
amount as revenues derived during the year. We have exceeded our
expectations for the past two years, and the City expects to have
unreserved, unappropriated fund balance1 in all three major funds for
the first time in over five years. The City anticipates to end the year
with an approximate surplus of $1,447,161 in general; $107,101 in water
and; $396,416 in sewer.
Timely Reporting – The City Auditor prepared monthly reports and monthly cash flow projections, and provided them to the Council within 30 days after the end of the month. The annual audited report, prepared by the City’s independent public accountants, was completed and presented to the Council on October 16, 2008. This was within the 6 months deadline after year-end. Other reporting requirements, such as the AUD and reports mandated by deficit financing legislation were also prepared in a timely manner.
Deficit Financing – On February 8, 2008 the Office of the State Comptroller certified the cumulative deficit through May 31, 2007 as $3,280,937. Prior to this certification, the City had borrowed $4.3M on a bond anticipation note through the use of special “Home Rule” legislation. When the notes came due in September 2008, the City paid down the deficit difference of $1,019,063 plus an additional $250,000 in principal.
2) Reduce personal services and related expenses.
Collective Bargaining – Health Insurance Payment –
Agreements have been reached with the CSEA and Fire unions, whereby the
union members agreed to start paying a small portion of the cost of
health insurance coverage on 6/1/2009. However, the portion paid is much
less then we had originally hoped for, we feel this is the first step,
and with subsequent contracts, we are confident the membership will pay
more. Health insurance payments from the Police unions amounted to
approximately $26,000 for the 2008/09 budget year.
Attrition – The City offered a retirement incentive package to current employees, for the 2008/2009 fiscal year. 11 full time employees decided to retire under this incentive plan. One of these people was not replaced, and several others were replaced with workers of at a lower job grade. The City was able to reduce the 2008/2009 payroll by more than $50,000 in connection with this plan, and we plan that some savings will be repeated in the years to come from these retirements.
3) Level tax base throughout the City.
Reassessment - The reassessment of all City properties completed. The new assessments will be in effect for the 2010/2011-tax roll.
4) Increase efficiency of Water and Sewer Meters.
Replace Water/Sewer meters - The installation of the meters began March 2009. The increased revenues have not yet been realized, but we still expect they will be significant to the City.
Prior Year Goals - Disappointments, setbacks, or stalemates:
1) Expand shared services.
Lease Fire Tower/Training Facility to not-for-profit organization -
We had hoped that a local not for profit would
lease this facility, however they were uninterested. The City has
entered into an agreement with District Four (local volunteers within
the County) to share this facility. As an incentive for this agreement,
the County has agreed to give the City $25,000 for improvements of the
Consolidate DPW Station with Cattaraugus County - Although we continue to hope that this will move forward in the future, nothing has happened with this item over the past year. We had delayed improvement on our current facility in hope an agreement could be reached with the County. However, the facility is in such disrepair, further delay was unacceptable. Therefore, the City is paying to have a new roof installed on our City Garage, at an approximate cost of $46,300. These funds could have been used for the new facility, making the likelihood that of collaboration more remote.
Creation of Local Water/Sewer Authority – Although this item was not mentioned in the prior year fiscal improvement plan, it was explored over the past year. The City had hoped that other local governments would like to join together in creating a water/sewer authority to direct the future of the water and sewer operations. However, there was not enough support from neighboring communities to move this item forward.