Cumberland Times-News

Local News

January 22, 2013

City: Keeping good bond rating critical

Mayor, council begin process of creating, adopting new budget

CUMBERLAND — The mayor and city council, along with City Administrator Jeff Rhodes and Comptroller Joe Urban met Tuesday to begin the process of creating and adopting its $35 million annual budget.

The city’s fiscal budget runs from July 1 to June 30. The group plans to meet monthly to discuss the budget, which they hope can be adopted by June.

Cumberland’s bottom line is expected to benefit from early state projections of an increase of $527,000 to the city in highway user revenues, a reimbursement from the state for maintaining its roads and highways.

The city may also receive  $100,000 in police protection contributions from the state, according to Rhodes.

The city had a $2.9 million surplus with the 2012 budget.

“We’ve made a great deal of changes. You have to live within your means,” said Rhodes.

“2010 and 2011 were a low point. We had liquidity issues,” said Urban in an interview following the meeting.

“Refinancing gave us a five-year window to increase our reserves. The state had cut our HUR and police protection,” added Urban.

“We have to make our operation sustainable. I never want to see us having to furlough people again,” said Rhodes.

Council member Nick Scarpelli asked Rhodes, “You’re optimistic that there will be more money available to do street repairs which are sadly needed?”

“If that is how council decides to use it. We are here tonight to seek your input on our programs,” said Rhodes.

“If there is no negative consequences to our bond rating or the process, I’m comfortable with stretching out the time and to dedicate more of our resources to street repairs,” said Kauffman.

Urban said Cumberland’s bond rating has a Fitch Score of A while getting an A- with the Standard & Poors rating institution. The highest rating possible is AAA.

“The ratings are important because it affects a bank’s desire to work with you and it helps decide the interest rates you can get,” said Urban.

The city has been investing $100,000 of it’s own funding into blighted property removal.

The demolition of the old Memorial Hospital with its $3.5 million price tag will contribute to the city’s governmental debt.

The city is continuing to look for large savings by refinancing some of the $18 million in debt the city carries.

A recent refinancing of $1.7 million in debt from a 6 percent rate to 4.7 percent is expected to save over $400,000, according to the city.

Revenues are looking to be gained by the city from its new employee health care package which goes live on March 1.

“We’re looking at a possible savings of $400,000 per year there,” said Rhodes.

Property taxes still remain the city’s largest source of income at about $10 million annually. Water supply adds $5 million and sewer charges around $6.8 million each year to the city’s coffers.

The city faces on-going fiscal challenges as evidenced by its carrying of $33 million in proprietary debit.

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