Property tax revenue declines 10%Published 10:28am Tuesday, February 23, 2010
By JOHN EBY
Dowagiac Daily News
Property tax revenues held steady from the previous year at $1.9 million, but it’s projected that the 2010 levy will show a 10-percent loss.
“A 10-percent decrease in those revenues is sizable, probably a couple hundred thousand dollars,” auditor Ken Berthiaume of Saginaw advised Dowagiac City Council Monday night.
Berthiaume gave the city an “unqualified” opinion – “the best a city can rate.”
State revenue sharing continues to erode, from $746,000 to $692,000.
“That’s a decrease there of about $50,000,” Berthiaume said. “In 2001-2002, you were getting $932,000. Property taxes really had to pick up the slack and expenses had to be well-controlled, as you know.”
“Last year, the balance sheet for governmental activities improved by about $108,000,” he said. “That reflects good control of your budget, I think.”
“In your business activities, we saw a substantial decrease in net assets. You had about $12 million, which went down to about $8.5 million. The asset that actually decreased was the cash balance, by about $3.5 million, an internal liability owed principally by the electric fund to the other funds.”
That’s because of the council’s decision April 27, 2009, to approve a 16-year power contract with I&M to ultimately yield savings from stable rates a few years down the road.
The cost in this new contract was 54 cents a kilowatt hour to purchase power, compared to 87 cents previously.
In the meantime, the switch from AEP meant paying $3.4 million owed from 13 months remaining on a two-year contract.
“The general fund balance is still sitting at about $804,000, but that includes a $365,000 receivable from the electric fund, so you really had a smaller amount of cash available going into the new year,” Berthiaume said. “The electric fund will need to generate profits over the next few years to pay that deficit down. If it hadn’t been for that charge, your funds would have been in good shape, as usual. That was really the only thing that threw the wheels off the buggy last year. It’s a one-time event – like Kevin (Anderson, city manager) said, a blip on the screen we want to put behind us. You have a good electric contract ’til 2026. That should pay off in lower rates.”
“It’s a very clean finding and I think we should feel good about where we’re sitting financially as we prepare for upcoming reductions in revenue that we know are coming,” Anderson said.
In other Feb. 22 business, the council approved Peninsular Lodge 10 of the Masons’ request to observe Memorial Day with a parade Monday, May 31; and Federated Covenant Church to hold a Palm Sunday event on March 28.