2012 Annual Report

Finance

finance collage


The finance department is responsible for preparing and maintaining the operating and capital budgets, cash management and investments, purchasing, payroll and income tax collections. The finance department consists of two offices; income tax and accounting.

In 2012, Montgomery's operating budget totaled $14.8 million. In addition to the operating budget, the City’s finance department administers a capital budget, with a four-year cash forecast.

In 2012, the finance department continued its participation in the City’s performance measurement process.  This effort involves the tracking and collecting of performance measurement data, which will ultimately be used by the department and the City to benchmark against finance departments in other municipalities.

Revenue and Expenditures

The charts titled "Where the Money Comes From" and "Where the Money Goes" provide a snapshot of how resources are collected and programmed for expenditures. In 2012, the finance department was responsible for the collection of approximately $7.2 million in income tax revenue and $4.8 million in property tax revenue.  In addition, the department is responsible for managing an investment portfolio of more than $20 million, which generated investment income of approximately $203,020.

As with most municipalities, public safety, property protection and emergency services are the largest single governmental function.  General government and public works account for over 46% of the remaining expenditures.


The finance department prepares quarterly and annual reports including the Comprehensive Annual Financial Report (CAFR).  In 2012, for the seventeenth consecutive year, the City was awarded the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the City’s 2011 CAFR.  The Moody’s Investor Services continues to recognize the City’s credit worthiness by assigning an Aaa credit rating to our debt.  Montgomery is one of only sixteen communities in the State of Ohio to be rated in this category.

Income Tax Revenue

As depicted in the graph to the right, income tax collections rose dramatically in 2008 from 2007, as a result of construction activity with one of the City’s major employers. However in 2009, income tax revenues decreased 10% from the amount collected in 2008.

For purposes of balancing operations with capital investments and related debt service, City Council passed Ordinance Number 21, 2006 which distributes the income tax revenues into three funds according to the following allocation:  67% to the General Fund, 25% to the Capital Projects Fund and 8% to the General Bond Retirement Fund.

The line chart titled “Total Revenues and Expenditures including General Fund 2003-2012 provides a historical perspective of the City’s ability to program and budget services, capital improvements and related debt service within the resources provided through the annual budget process.


Sound Financial Policies

In order to maintain a sound fiscal environment, City Council has adopted an array of financial policies:

Investment Policy:The graph titled "Investment Income" reflects revenues which range from $223,162 in 2003 to $203,020 in 2012.  City Council adopted an investment policy which applies to cash management and investment activities of the City of Montgomery.  The policy is reviewed periodically and updates are adopted by Council.  The primary objective of the City's investment activities is the preservation of capital and liquidity, maximizing investment income and conforming to State laws governing the investment of public funds.

Fund Balance Policy: The fund balance is a key measure of the City's overall financial health.  City Council adopted a policy requiring maintenance of a six to twelve-month reserve of operating expenditures for the General Fund, a minimum cash balance of $1,000,000 in the Capital Improvement Fund and one year of debt service payments in the General Bond Retirement Fund.  The graph titled "General Fund Balance - Budget and Actual" depicts that actual year-end fund balances have exceeded budget estimates.

Long-Term Debt: On December 31, 2012, the City had $2,800,165 of bonded debt; of this amount $2,720,000 is general obligation debt and  $80,165 is special assessment debt.  As a result, the City has reduced its outstanding debt per capita from $936 in 2003 to $126 in 2012.  The chart below depicts the total outstanding debt for the City over the last ten years.


Financial Activity and Position Statements

Readers of the City of Montgomery's Financial Activity Statement and Financial Position Statement should keep in mind that both statements are presented in conformance with Generally Accepted Accounting Principles or GAAP) basis. The amounts shown employ the same method of accounting and are summarized from the audited financial statements within each respective Comprehensive Annual Financial Report.

The following is a summary of the financial activity and financial position of the City:

FINANCIAL ACTIVITY STATEMENT
For the years ending December 31
(in thousands)
        FINANCIAL POSITION STATEMENT
As of December 31
(in thousands)
SOURCES OF REVENUES 2012 2011   FINANCIAL BENEFITS 2012 2011
Property Taxes $ 4,832 $ 5,265   Cash $ 10,960 $ 8,476
Income Taxes 7,163 7,126   Investments 19,976 19,480
Other Local Taxes 1,686 1,070   Receivables 9,218 11,654
Intergovernment Revenues 1,176 1,605   Property and Equipment 38,800 39,445
Charges for Services 1,332 1,128   Other Benefits 42 26
Investment Earnings 203 276   TOTAL FINANCIAL BENEFITS 78,996 79,081
All Other Revenues 329 172    
TOTAL SOURCES 16,721 16,642    

USES AND EXPENSES
 
FINANCIAL DETRIMENTS
Security of Persons and Property 5,938 5,626   Amounts Owed to Vendors 223 353
Parks and Recreation 1,350 1,385   Amounts Owed to Employees 436 418
Community Environment 516 460   Accrued Interest 9 10
Public Works 2,369 2,701   Long-Term Debt 2,756 3,117
General Government 4,436 3,903   Other Liabilities 5,019 6,593
Debt Service 149 187   TOTAL FINANCIAL DETRIMENT 8,443 10,491
TOTAL USES 14,758 14,262   TOTAL BENEFITS
TOTAL SOURCES   OVER DETRIMENT $  70,553 $ 68,590
OVER USES $  1,963 $ 2,380    
Note: The Financial Activity Statement, known in accounting terms as the "Income Statement", provides a summary of the sources (revenues) and services (expenditures/expenses) of the City.   Note: The Financial Position Statement, known in accounting terms as the "Balance Sheet", reports the benefits (assets) available to provide services while detriments (liabilities) are the amounts for which the City must pay in the future.

Return to top Benefits over Detriments represents the difference between the financial assets and liabilities of the City providing the net worth of Montgomery.