Cumberland Times-News

Local News

January 7, 2014

City government in the black for first time since 2007

CUMBERLAND —  City officials are reporting an improved financial picture for the city’s bottom line after several years of struggling through tough times that included a $1.9 million negative general fund balance during a 2010 low point.

“We had our share of sleepless nights,” said Jeff Rhodes, city administrator.

The city’s fiscal year is at the midway point. Cumberland’s operating budget runs from July 1 to June 30 annually. Preparations begin soon for the 2015 budget.

During an interview with the Times-News, Rhodes and City Council member David Kauffman gave an update on the city’s current fiscal status.

“The city’s ability to get back into the black, while paving roads, razing blighted properties and demolishing the (Memorial) hospital, is the story of the year for me,” said Kauffman.

The last time the city’s annual $35 million general fund had a positive bottom line was 2007 when the general fund had about a $64,000 surplus, according to Rhodes.

“That’s not much for a city this size. That’s like you and me having a nickel,” said Rhodes.

In the following years, the structural debt plummeted to a negative $1.9 million in 2010 before slowly improving.

“We were having trouble paying the bills and making payroll,” said Rhodes.

Rhodes said the most recent audit shows the general fund to be $438,716 in the black.

“I don’t know if we have turned the corner, but we are looking around it,” said Rhodes.

Measures taken to improve the city’s financial situation included the refinancing of debt, reducing and eliminating waste, staff reductions through attrition and discontinuing using short-term debt.

The city had been using a costly method of short-term borrowing called tax anticipation notes.

“It’s used when you can’t wait for your next round of round of taxes to come in,” said Rhodes.

Kauffman said the short- term borrowing notes were costly.

“The interest was like $30,000 or $60,000 on that,” said Kauffman.

“It’s legal. It’s not uncommon. But you can’t keep borrowing like that,” said Rhodes.

In 2011, the mayor and council gave notice that they were eliminating the use of tax anticipation notes.

Kauffman said much of the credit goes to Rhodes and Joe Urban, the city comptroller.

“The work that Jeff and Joe have done to get our finances in order had been great,” said Kauffman.

Rhodes thanks the employees who had to go without raises for five years but stuck with the city despite the financial struggles.

“They could have gone elsewhere,” said Rhodes.

Rhodes said he feels good about operating in the black, but remains cautious.

“We’re not out of the woods yet. We are on the right path,” said Rhodes, “We still have $60 million of roads to pave.”

Greg Larry can be contacted at glarry@times-news.com.

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