Hello! New York State Comptroller Tom DiNapoli is in Watertown today, and as part of his visit (his office is also hosting a conference on leadership in local government) he’s released a new report on that city’s financial situation.
Turns out the city of about 27,000 is doing pretty well. Here’s the complete report, but I’ll mention some of the highlights here (some from a press release entitled “DiNapoli: Watertown boasts strong finances,” hence the title of this post). Not surprisingly, the city has benefited from its proximity to Fort Drum, where more than 19,000 servicemembers are stationed and about 4,500 civilians also work. The report estimates the direct economic impact of the base at $1.4 billion for 2011-2012.
In some ways Watertown is lagging. Median household income is $37,514, which is below both the statewide median ($56,951) and that for all cities ($38,699); and the poverty level is higher than the median for cities in the state as well. And the unemployment rate is a little higher, at 9.2 percent, than that for the state as a whole.
But its growth, at 4 percent, has been higher than the average for New York cities (see press release, below, or full report) and its expenditures haven’t increased any more than the state average. And house values are higher than the median; plus, the report says, the city has been managing its money quite well in recent years:
The City has paid down a significant amount of debt. As a result, its debt service costs in 2011 accounted for 7.0 percent of expenditures, down from 20 percent in 2001. This positive trend, along with the City’s substantial fund balance and a large tax margin, leave Watertown well positioned to cope with current and future fiscal challenges.
But, the report says, because the city’s financial plan calls for drawing down balances while increasing taxes and other revenue (utility and water/sewer rates) puts it in danger of not being able to “respond to future economic challenges.”
Most of the press release from DiNapoli’s office is below for more detail, and you can link to the report above. Happy number parsing!
DiNAPOLI: WATERTOWN BOASTS STRONG FINANCES
The city of Watertown has maintained a stable tax base, developed healthy revenue streams and built up rainy day reserves, according to a fiscal profile of the city issued by State Comptroller Thomas P. DiNapoli. The report was released today in conjunction with the Comptroller’s 2013 Local Government Leadership Institute in Watertown.
“Watertown has accurately and realistically budgeted, putting it in a strong fiscal position,” said DiNapoli. “The proximity to Fort Drum and the Canadian border provides Watertown a notable economic advantage, but wise budgeting decisions have been integral for the city’s continued fiscal health. Mayor Graham and the city council should be commended for implementing a multiyear financial plan that has kept the city’s finances on track and provided the necessary flexibility to address unforeseen challenges and make ongoing infrastructure investments.”
“Over the past decade the City of Watertown has worked hard to keep its finances on solid ground while properly planning for the future,” said Watertown Mayor Jeffrey Graham. “Comptroller DiNapoli’s report provides affirmation that our efforts have paid off. I thank the Comptroller for his willingness to offer assistance to local governments as they try to cope with today’s fiscal challenges.”
DiNapoli’s report found the city’s revenue grew 4 percent on average annually from 2001 through 2011, compared to 3.4 percent for all New York cities during the same time frame. Meanwhile, the city’s expenditures increased 3.4 percent on average annually during the decade, the same rate as for cities overall.
The higher rate of revenue growth and slower rate of spending have allowed Watertown to reduce its debt service costs from nearly 20 percent of expenditures in 2001 to 7 percent in 2011. According to the city’s most recent annual financial report, the general fund had a balance of $8.9 million, or 16 percent of expenditures, at the close of 2012.
Watertown has also benefited from markedly higher growth in property values than other cities. From 2005 through 2010, the city’s property values increased 74 percent compared to 30 percent for other upstate New York cities. As of 2012, the city’s median home value was $116,700 compared to $99,700 for the statewide median.
Moody’s Investor Services recently upgraded the city’s bond rating to Aa3, specifically citing the city’s strong reserves, manageable debt level and increasing role as a regional economic center.
The report, however, highlighted several demographic challenges facing the city. For example, Watertown’s median household income of $37,514 is significantly lower than the statewide median of $56,951. More than 18 percent of families in the city are living in poverty compared to 15 percent for all cities. In addition, the unemployment rate of 9.2 percent is higher than the statewide rate of 8.5 percent.
The Comptroller’s report also highlighted:
· Watertown has exhausted 6 percent of its Constitutional Tax Limit, leaving the city an available tax margin of $18.5 million;
· The city’s population has declined 21 percent from 1950 through 2010;
· Sales and use taxes accounted for 30.4 percent of city revenues, compared to 20.5 percent for cities statewide;
· Real property taxes accounted for 13.1 percent of revenues, compared to 25.6 percent for cities statewide; and
· Fort Drum, located just miles from the city and home to 19,000 soldiers, provided a $1.4 billion economic impact on the Watertown region in 2011-12;
DiNapoli and Mayor Graham both addressed attendees of the 2013 Local Government Leadership Institute, which was held in Watertown. The fifth annual leadership event featured panel discussions with local government officials, business leaders and educators from across Central New York, who discussed various strategies for coping with fiscal stress. The event’s keynote address was delivered by Onondaga County Executive Joanie Mahoney.
DiNapoli established the Local Government Leadership Institute in 2009 to help bring together local government officials to increase dialogue and collaboration, share experiences, raise awareness of common issues and provide practical suggestions. At the same time, the Institute reinforces key leadership principles – skills that can help officials navigate today’s increasingly difficult fiscal environment. Over the last four years, the Comptroller’s office has trained more than 40,000 local officials on a range of financial and operational issues. The next Leadership Institute will be held June 19 in New Paltz.
Members of DiNapoli’s staff were also on hand to discuss the Comptroller’s Fiscal Stress Monitoring System that will identify local governments facing significant fiscal stress. The early warning system will present a realistic picture of financial conditions at the local level and identify the economic and budgetary challenges facing municipalities and schools. This system will make available an objective analysis to assist taxpayers in understanding and participating in local financial decision-making. DiNapoli will release a fiscal stress score of counties, cities and towns, as part of this system, in the coming weeks.
In the coming months, DiNapoli will continue to issue additional fiscal profiles on select cities across the state to further inform officials and citizens on some of the unique environmental and systemic pressures facing New York’s cities. As part of this effort, the Comptroller will also release in-depth reports on some of the issues that contribute to the financial pressures on local governments.