2013 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 2013, Montgomery's operating budget totaled $15.2 million.  In addition to the operating budget, the City’s finance department administers a capital budget, with a four-year cash forecast. 

In 2013, 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. 

Revenues and Expenditures

The charts below, titled "Where the Money Comes From" and "Where the Money Goes" provides a snapshot of how resources are collected and programmed for expenditures. In 2013, the finance department was responsible for the collection of approximately $7.6 million in income tax revenues and $5.1 million in property tax revenues.  In addition, the department is responsible for managing an investment portfolio of more than $20 million, which generated investment income of approximately $66,401.

As with most municipalities, public safety, property protection and emergency services are the largest single governmental function.  General government and public works accounts for over 25% of the remaining expenditures.


The finance department prepares quarterly and annual reports including the Comprehensive Annual Financial Report (CAFR).  In 2013, 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 2012 CAFR.  Moody’s Investor Services continues to recognize the City’s credit worthiness by assigning an Aaa credit rating to our general obligation debt.  Montgomery is one of only 16 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. Income tax revenues have been increasing each year since the 2009 downfall and in 2013 revenues exceeded collections from 2008 by 4.1%.

For purposes of balancing operations with capital investments and related debt service, income tax revenues are distributed into three funds according to the following allocation: 76% to the General Fund; 20% to the Capital Improvement Fund; and 4% to the Debt Retirement Fund.


Total Revenues and Expenditures

The line chart titled “Total Revenues and Expenditures including General Fund 2004-2013" provides an 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 $282,737 in 2004 to $66,401 in 2013. 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 City 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, 2013, the City had $15,598,282 of bonded debt; of this amount $1,130,000 is general obligation debt, $13,265,000 is special obligation debt and $1,183,282 is special assessment debt.

In May of 2013, the City issued $13,265,000 of special obligation bonds to finance public improvements which consist of constructing a roadway and public garage at the commercial/residential development known as the Vintage Club. The repayment of the bonds is secured by payments in lieu of taxes generated within the tax increment financing district which encompasses the entire Vintage Club development. The development includes a high-end housing development, two medical office buildings consisting of 100,000 square feet occupied by Christ Hospital and plans for future commercial development in the northern section of the development.

As a result, the City’s outstanding debt per capita increased from $942 in 2004 to $1,058 in 2013. 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 2013 2012   FINANCIAL BENEFITS 2013 2012
Property Taxes $5,109 $4,832   Cash $13,539 $10,960
Income Taxes 7,564 7,163   Investments 27,697 19,976
Other Local Taxes 1,651 1,686   Receivables 9,155 9,218
Intergovernment Revenues 1,285 1,176   Property and Equipment 44,999 38,800
Charges for Services 1,337 1,332   Other Benefits 44 42
Investment Earnings 66 203   TOTAL FINANCIAL BENEFITS 95,434 78,996
All Other Revenues 409 329    
TOTAL SOURCES 17,421 16,721    

USES AND EXPENSES
 
FINANCIAL DETRIMENTS
Security of Persons and Property 5,527 5,938   Amounts Owed to Vendors 184 223
Parks and Recreation 1,323 1,350   Amounts Owed to Employees 384 436
Community Environment 661 516   Accrued Interest 51 9
Public Works 2,457 2,369   Long-Term Debt 15,571 2,756
General Government 4,798 4,436   Other Liabilities 6,455 5,019
Debt Service 421 149   TOTAL FINANCIAL DETRIMENT 22,645 8,443
TOTAL USES 15,187 14,758   TOTAL BENEFITS
TOTAL SOURCES   OVER DETRIMENT $ 72,789  $70,553
OVER USES $  2,234 $1,963    
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.